More Than Money: How Angel Investors Strengthen Startup Communities

NEXT Missouri recently spoke with Dawn Batts, a Detroit-based angel investor and Vice Chair of the Angel Capital Association, about what keeps more people from becoming angel investors—and what can happen when they do.

As Missouri prepares to launch the Angel Investment Incentive, Dawn’s experience offers lessons for Missouri: Angel investing may be more accessible than many potential investors realize, and bringing more people into the market can mean more than additional capital for startups. It can also bring new perspectives, expertise, and connections that strengthen the entrepreneurial ecosystem.

Here’s our conversation with Dawn, edited for clarity.

You’ve spent a lot of time helping accredited investors become angel investors. What keeps more people from getting involved?

One of the biggest barriers is simply awareness. When I got into angel investing, I was surprised by how many people didn’t know it was something they could do. There was a perception that you had to be ultra-wealthy.

Even people who have the financial means to invest may lack the confidence to do it because startup investing is new, unfamiliar, and largely private. You can’t just Google all the information you might want about a company.

That’s why I believe so strongly in education. Investors need to understand the risks, but they also need the knowledge and tools to evaluate opportunities and feel comfortable making their own investment decisions.

Why does it matter to bring more—and different—people into angel investing?

People tend to understand problems they have experienced themselves or that they have some proximity to. If you bring different people and perspectives to the investment table, they may see opportunities that other investors don’t recognize or understand. That can mean both more capital in the ecosystem and different founders and different ideas have an opportunity to get funded.

That was a goal of an angel investing group I co-founded. We wanted to build a truly inclusive group of people with different backgrounds and experiences, who cared about innovation and wanted to fund companies.

We’ve seen a multiplier effect from that work. Individuals who knew very little about angel investing when we met them became active investors. Some became limited partners in funds. One started a fund. Others are now teaching people about angel investing and bringing friends and colleagues into the space. One investor I spoke with recently now has around 25 companies in her portfolio. That’s when you say, “Okay, we did what we set out to do.”

What difference can angel investors make for entrepreneurs and their communities beyond providing capital?

I have a philanthropic heart and a business head. Angel investing lets me combine the two.

Of course, capital is a key part of angel investing: Founders rely on angels to finance business growth and angels seek a return on their investment. But angels bring much more than money. Many are former founders, executives, or people who have spent their careers developing expertise and relationships. They want to share that knowledge with founders.

I tell founders, if it’s only money, don’t do it. Angels want to be helpful. That can mean helping a founder think through a challenge, making an introduction, opening a door, or sharing lessons from their own experience.

Those new connections strengthen the ecosystem. Founders gain access to knowledge and connections they may not otherwise have had. Investors become more engaged and learn from one another. And over time, those relationships bring more people into the work of supporting entrepreneurs and innovation.

What would you say to someone who has never invested in startups before but is curious about becoming an angel investor?

The way I look at it is this: Innovation costs.

If we want new solutions to some of our hardest problems, somebody has to help fund those ideas.

That’s what excites me. I get to hear about companies trying new and sometimes crazy ideas. I know some of them will fail. But failure and iteration are also part of innovation. It costs money to learn and to try again.

People choose to spend their time and money in different ways based on what they care about. For me, angel investing is one place I choose to put some of my money because I believe in innovation and I want to participate in it. It gives me an opportunity to invest in new ideas and have an impact at the same time.

Missouri’s Angel Investment Incentive launches January 1, 2027. NEXT Missouri is helping investors, entrepreneurs, and ecosystem partners prepare for the new program. Learn more about the tax credit and how it works at our Angel Hub.