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For entrepreneurs, nabbing numerous angel investors — and prominent ones to boot — has become a kind of trophy collecting, a chase that comes with some risk for their companies, Mike Isaac reports.

Last year, over 2,960 angels participated in a financing round, more than triple the 822 angels who did so in 2010, according to CB Insights, a research firm that studies venture capital. There is even a moniker for financing rounds that have many angels with no lead investor: “party rounds.”

“Seed investing is the status symbol of Silicon Valley,” said Sam Altman, president of YCombinator, the start-up accelerator that has birthed companies such as Airbnb and Reddit. “Most people don’t want Ferraris, they want a winning seed investment.”

But while young founders are taking advantage of what is probably one of the best times to be raising venture capital, there can be serious downsides. When many angels are involved, for example, no one investor may feel compelled to help the company if it runs into trouble. Read more »