Brian Nichols is the co-founder of Angel Squad, a community where you’ll learn how to angel invest and get a chance to invest as little as $1k into Hustle Fund's top performing early-stage startups

Walk into any VC pitch event in 2015 and you'd see the same demographic: wealthy white men, mostly from Stanford, mostly living in the Bay Area.

That monoculture created massive blind spots. Entire markets went unfunded because investors didn't understand them.

Something fundamental shifted between 2020 and 2025.

The Demographics That Actually Changed

Angel Squad's 2025 membership data reveals the shift. Women now represent 42% of active angel investors, up from 18% in 2020. People of color make up 47%. International members across 40+ countries account for 38%.

Compare this to traditional venture capital, where women represent only 15% of GP positions and people of color less than 12%.

Why did angel communities diversify faster? Three structural factors:

Lower capital requirements. You can participate with $25K-50K versus the $5M+ LP commitments typical for VC funds.

Remote participation. Geographic constraints matter less when pitch sessions happen on Zoom.

Transparent criteria. Communities have clear membership requirements. Traditional VC relies on personal networks that systematically exclude outsiders.

Elizabeth Yin and Hustle Fund have been explicit about this. Our mission is "to democratize wealth through startups by catalyzing capital, knowledge, and networks in startup ecosystems globally."

Why Diversity Produces Better Returns

The case for diverse angel communities isn't just about fairness, it’s about performance. Homogeneous groups make predictable mistakes.

Diverse communities see more. When a founder pitches childcare logistics, parents immediately understand the pain point. When a company targets Brazil, Brazilian members can evaluate go-to-market claims.

This shows up in portfolio construction. Diverse angel communities invest in companies serving markets that traditional VCs ignore. Not because those markets are smaller, but because homogeneous investors don't understand them.

The Latin American e-commerce market is massive, but most Silicon Valley VCs don't invest there. Angel Squad members from Latin America actively invest in their home markets, capturing returns institutional investors miss.

The Founder Pipeline Effect

Diverse investor communities change who becomes a founder.

When you see investors who look like you, founding a company seems possible. When every investor is a wealthy white Stanford grad, and you're not, entrepreneurship feels inaccessible.

This creates a flywheel. Diverse investors fund diverse founders. Those founders build successful companies. They become angels themselves and fund the next generation.

The Underestimated Markets

Traditional VC focuses on massive TAM defined through a narrow lens. Consumer products for American upper-middle-class professionals. B2B tools for Silicon Valley startups.

Diverse angel communities recognize valuable markets that traditional VC dismisses as "too small."

Healthcare for aging populations. Financial services for immigrants. Education technology for non-English speakers.

One Angel Squad member invested in software for churches. Traditional VCs passed, TAM seemed small. The company now serves 8,000 churches generating $4M ARR growing 30% annually.

What Changes in Investment Criteria

Diverse angel communities evaluate founders differently. Not lower standards, different standards recognizing different paths to success.

Traditional VC heavily weights founder pedigree. Top school? Prestigious company? These signals systematically exclude talented people who took non-traditional paths.

Diverse angel communities pay more attention to domain expertise and lived experience. A founder who worked in logistics for 15 years has valuable pattern recognition even without Stanford credentials.

As Shiyan Koh notes, successful investing requires identifying both strong teams and interesting opportunities. Diverse investor groups are better at recognizing strong teams that don't fit traditional molds.

The Follow-On Investment Gap

Diverse founders have dramatically higher success rates at seed stage but struggle to raise Series A from traditional VCs.

Why? Because institutional investors don't have diverse partners who understand those markets. The companies perform well but don't "feel" like winners to homogeneous investment committees.

Angel communities solve this through follow-on discipline. When diverse angels invest at seed and the company performs well, they double down at Series A even if institutional investors pass.

The Geographic Distribution

Traditional VC concentrates in three cities: San Francisco, New York, Miami. Diverse angel communities are genuinely distributed.

Innovation happens everywhere. Talented founders in Austin, Atlanta, Chicago struggle to access capital from Bay Area VCs.

Angel communities with global distribution invest locally. Members in Singapore invest in Southeast Asian companies. Members in São Paulo invest in Brazilian founders.

Why This Trend Accelerates

Several factors suggest diverse angel communities will continue growing faster:

Generational wealth transfer. Millennials and Gen Z are more diverse. As they accumulate wealth, they'll seek investment opportunities that reflect their values.

Remote work normalization. Geographic barriers continue falling.

Performance validation. Early data suggests diverse angel communities deliver comparable or better returns.

Network effects. As diverse communities grow, they attract more diverse founders, creating better dealflow.

What This Means Going Forward

The rise of diverse angel investing communities is reshaping who gets funded and which companies get built.

Over the next five years, expect more institutional capital flowing to diverse angel communities. More founder diversity at later stages. New venture models led by diverse GPs who learned investing through angel communities.

The question isn't whether diverse angel investing communities matter. The data proves they do. The question is how quickly the rest of venture capital adapts.