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Go small or go home

by evbart on November 22, 2008 in angel investing, startup, Uncategorized, VC

At the Web 2.0 Summit a few weeks ago, I sat in on a small panel called Incubator2.0.

It consisted of an all star alley/valley line-up: Josh Kopelman, Paul Graham, Jeff Clavier, and it was moderated by Dave Mcclure.

The underlying theme of the talk was that these guys are all betting on the early early.  Not the “early stage” that your “bulge bracket” VC lists on their site, but actual early stage deals.  Less than a million, ideas on napkin, barely a powerpoint, etc

For these the investors, the numbers also make more sense.  Get in early, get in with your friends through syndication, have room for your company to grow, and have the flexibility to take a $15million exit, rather than pushing for the IPO or the billion dollar acquisition.

I’ve been seeing this theme reflected in the angel community as well.  And frankly, its why we targeted the angel investors first at Angelsoft.  Its a more exciting space, and theres plenty of room upstream for your investment to find success.  I’m even seeing individual angel investors break off from their investment networks to do even earlier stage deals on their own.

I also want to point out that the guys on the Incubator2.0 panel heavily invested syndication.  They almost always do deals with each other, and are always shopping deals around.  Now not everyone has the connections that these guys have, but throug Angelsoft we’re connectin Angel investors from all across the world, and they’re syndicating to get larger deals done (or here)!

So there you have it, go early or go home.  Lots of people are feeling this trend, and they’re even predicting a lot of “culling” at the high end of the markets.  Money will dry up as the big funds can’t meet their numbers, and the model breaks down.  Even the MBAs are going back to the drawing board with Adeo Ressi.

At the earliest stages, you can get your hands dirty, find deals before the rest of the private equity world, and you can get in cheap.  This is where the real funding gap is, so there’s lots of people looking for money to get over the hump.

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Angel networks getting a bad rap

by evbart on September 19, 2008 in angel investing, VC

I’ve been out in the bay area now for a little over a month, and I’m seeing an interesting trend in how angel networks are perceived.  Some VCs that I talk to are very interested in working with angels, and see the value of Angelsoft as having aggregated all these different angel investors into one place, making it easier for VCs to engage them.

This is a great positive attitude, and I think the VCs could benefit a lot from angels.  Angels definitely have some advantages over VCs, that shouldn’t be down played.  Ron Conway points some of them out here, and Roger Erhenberg has been talking about how “Super Angels” are going to dominate for a while.

The flip side of this argument, and one I’m hearing just as often, is that angel networks are a waste of time and tough to deal with.  I didn’t understand where this sentiment was coming from until I had a more in-depth conversation with Jeff @ Softtech VC.

His criticism was one more directed towards the time spent raising capital.  He hates that startups have to spend time raising money, and he feels that non-specialized angel networks can take too much time.

For a web2.0 company to go pitch to 80 investors with varying interests along side a biotech company and a retail company, that startup may not get the attention they deserve.  Even if they do, it make take much longer for a group of people to organize and decide to invest, than it would with an individual angel.

This concept also adds to the case for super angels being the best route.  Investors that are quick, can do deals anywhere, and are well connected across the startup community.  I think it also makes a great case for sector focused angel networks.

In the end, since this angel network = slow and inefficient concept seems to be pretty wide spread, I think its a great thing for the networks to be aware of.  Yes, we’re talking generalizations, and we all know there are some really great networks out there, but if the Venture community is going to become more efficient as a whole, all the parts need to work better together.

Its really all about reputation.  Investors are starting to realize that from the entrepreneurs perspective through sites like the funded, but its more than that.  You also have a reputation to maintain amongst investors.  Realize that if you’re not sector specific, that you need to find someone who is, so you can provide value to the entrepreneur.  Be even more aware of how long you take to get back to those entrepreneurs, because this is a big deal to them, and if they have VCs backing them (as angels), you need to take care to protect your reputation with investors too!

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Diggo Social bookmarking for VC Referral Relationship Management

by evbart on October 16, 2006 in CRM, social bookmarking, VC

A couple months ago I wrote about using Diggo to track and share information about real estate postings, and I also followed up that post here with a post about how a full web application/portal could be built to incorporate these features.

Rob over at Ventureblogalist continues to turn out high quality posts about the VC world, and this time he comes up with a very creative use of diggo.

Basically by creating a bookmark in diggo for each Venture Capital firm that he finds, and then using the diggo comments section to store information about their portfolio companies, he has created an online database of VC firms that he can refer deals to. The objective being to build goodwill with other VC firms and entrepreneurs by successfully making matches.

Glad to see some other people out there blogging about CRM and Social Bookmarking. In my opinion both markets are fairly immature. CRM has not seen many advances, other than a shift of the same old concepts to the web, in quite some time. Social Bookmarking on the other hand is the new kid on the block, but it seems to be struggling to find more serious applications than del.icio.us (which I use almost everday, albeit with limited success). This creative use of diggo as a mild CRM/Referral Relationship Manager just goes to show there are plenty of other applications for social bookmarking and that the CRM market is still under served.

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Slow posting from California

by evbart on June 29, 2006 in events, VC

Sorry about the lack of posts lately. I've been busy with a couple side projects, and this trip out to San Jose, CA to check out the Larta Venture Forum. Highlights included:

1) Cleantech panel discussion: The Cleantech Imperative: Promise or Pandora's Box?

2) A cool solar concentrator product by Practical Instruments called the Heliotube. Its the same size as a standard solar cell, significantly thinner than most concentrators, and costs less than the standard solar cell. Good Luck to these guys!

3) Keynote speaker: Tony Perkins , CEO of Always On/ Going on.

He spoke about the IM Generation, social networking, and majorly plugged his new service Going ON. Interesting Stuff, though I dont think Going On is about to de-seat MySpace as king. It could become Myspace for the west coast tech and VC scenes, though that might never reach the number of users on Myspace!

Major Points of his talk:

  • Some fairly shockingly high percentage of what people read these days is content generated by someone they know.
  • People are looking for a more personal media consumption experience.
  • Big Media, who we though was on the rise and rapidly going to merge into very few humungous entities, will now be picked apart by millions of media publishers
  • Kids these days spend lots of time maintaining their personal networks, its called a Myspace page.
  • MySpace pages, blogs, etc are all forms of personal branding.
  • When designing web applications, THING OPEN, think interoperability.
  • Paul Otellini, the Intel CEO and a person whose time is worth more than just about anyone else out there, said the single best use of his time is blogging on the internal blog for his employees.

Overall it was an interesting experience and fun introduction to the tech/VC world. Oh yeah, and I'm writing this post from the Caltrain (boy do I love EVDO) as I head to San Francisco to get a change of scenery.

Cheers

 

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