An archangel is an angel investor who has invested in a number of ventures that have achieved fame and fortune as commercial successes. An angel investor with this degree of success may also be referred to as a "super angel."
The term may also refer to an external advisor hired by a group of angel investors to perform due diligence and provide advice on business opportunities that are being considered by the group.
Angel investors are high-net-worth individuals who deploy their own funds to provide startup capital to promising early-stage ventures. Silicon Valley, where many of the world's biggest technology companies got their start, is home to numerous archangels. While most angels are active and hands-on investors, they may sometimes need the services of an archangel (external advisor) in areas such as legal and business development.
An archangel may serve as relationship builder among angel investors, leveraging their clout and notoriety to bring them together for deals. Archangels build up reputations based on their successful exits, especially deals with many multiples in the return on investment. As their presence offers them greater traction in the investment community, archangels can find themselves wielding the clout to attract other investors to funding rounds. Even if the archangel is not participating in the round, but has already invested in the company, they can connect owners in search of backers with groups of potential investors.
Despite the lucrativeness of their past deals and the influence they hold, an archangel might not be considered to be a venture capitalist. This may be because an archangel continues to invest in early-stage companies rather than the more mature companies venture capitalists focus on. Regardless, the presence of an archangel in a funding round may quickly attack other backers to the deal.
An archangel may be known for helping other angel investors see positive returns on the investments by steering them to deals that prove to be lucrative for all participants. Their insight may be subsequently sought by other investors as they have shown a knack for choosing the right teams and companies to put their money toward. Archangels may have a reputation for quickly flipping their investments, which generates more wealth for themselves. They might also make fewer demands of the companies they invest in, compared with venture capitalists who use a different barometer for measuring the growth and success of the companies they back.