Our Angel Investments for 2023: Why Channel Angels Funded These 12 Technology Startups

Amid heightened interest rates and valuation pressure, many tech startups had a challenging year in 2023.

Instead of running for the exits, Channel Angels maintained a disciplined approach to early stage and follow-on investing. As a reminder, we typically invest in early stage startups that sell to and through IT channel partners — particularly MSPs. While we typically don’t lead funding rounds, we do participate in Seed, Series A and follow-on rounds. And, we’re available to offer strategic advice to that startups we back.

While some angel groups scaled back their funding activities in 2023, we maintained a steady pace of investments throughout the year.

Here’s a look at our investments for 2023, and why we opened our wallets to back these companies (sorted alphabetically).

1. Evo Security (cybersecurity for MSPs, SMBs): Evo develops Identity and Access Management (IAM) software that allows MSPs to safeguard SMB customer networks. The IAM market is highly fragmented and growing. And most IAM companies don’t fully understand MSP business needs. This is our second investment in Evo.

2. Flex (FinTech for SMBs): Most of our angels have first-hand experience managing small business finances. With that reality in mind, we invested in Flex — a “super app” designed to help SMBs manage credit, banking, payments and insurance. Hundreds of SMBs have adopted the app. Flex in September 2023 announced a debt and equity funding round, which includes debt financing from CIM with an agreement to fund up to $100 million. The round also includes $20 million in equity capital led by Florida Funders with participation from Home Depot Ventures, MS&AD Ventures, Companyon Ventures and others.

3. Lightmatter (cloud-scale hardware for AI): As you may have heard, AI applications demand considerable hardware horsepower and energy consumption. So far, Nvidia is the poster child for AI chips. But we think there’s room for something better in the market. For instance, Lightmatter develops “photonic” technology that allows cloud providers to more effectively and efficiently scale AI workloads. The company raised $154 million in Series C funding from SIP Global, Fidelity Management & Research Company, Viking Global Investors, GV (Google Ventures), HPE Pathfinder and existing investors. Lightmatter’s valuation reached $1.2 billion in December 2023, Bloomberg reported.

4. Nuview (sustainability): This company competes outside of our core channel market. But we also have a growing interest in sustainable technology. (Our sister company, after all, is Sustainable Tech Partner.) Nuview is an earth observatory company develops geospatial technology to help solve the most “challenging scientific, environmental, and commercial problems.” Key Nuview investors include Leonardo DiCaprio and MaC Venture Capital, along with Broom Ventures, Cortado, Florida Funders, Industrious, Liquid2, and Veto Capital. We’re watching to see whether ISVs will be able to plug into the platform…

5. SpaceX (aerospace): This is another opportunity that competes outside of our core channel partner focus. As most of the world knows, SpaceX designs, manufactures and launches advanced rockets and spacecraft. Yes, we’ve gone long on SpaceX prior to their IPO…

6. Ternary (cloud cost management): In many enterprises and even small businesses, runaway cloud costs are the norm. Further complicating matters, partner-friendly cloud cost management tools are hard to find. That explains why we invested in Ternary — a Google Cloud cost management for MSP partners & customers. The company raised $12 million in Series A funding led by Jump Capital, with continued support from existing investors Fin Capital, RiverPark Ventures, Great Oaks Venture Capital, and Gaingels.

7. Togal.ai (cloud-based construction estimation software): The company’s software can automatically detect, measure, compare and label project spaces and features on architectural drawings. Togal.ai in March 2023 raised $5 million in a pre-Series A SAFE round with a $50 million valuation cap.

8. Vali Cyber (Linux security): Much of the Internet runs on Linux servers and virtual machines, which makes the operating system a prime target for cyberattacks. Vali Cyber wants to safeguard that vector from attack. And they’re working with MSSP and MDR partners to boost cybersecurity worldwide. The company raised $15 million in Seed funding in September 2023, led by Grotech Ventures and the 412 Venture Fund (412VF). Additional investors included Riverfront Ventures and Florida Funders, among others.

Four Undisclosed Deals: I’m not blogging about four of our 2023 investments because the details remain undisclosed. The four startups involve cybersecurity, data protection, industrial robotics, and e-commerce scalability. All four companies have emerging channel partner programs.

Our Next Investments: We plan to remain responsibly active in 2024. If you’re seeking funding, please fill out this form. If you’re an established or aspiring angel investor who would like to explore potential investments with Channel Angels, then please complete this form.