Moving Mountains
Thursday, February 22, 2007
Be the angel, not the banker
Working to try to get my startup funded (besides the $100K or more I have put into it so far) has reminded me that the difference between an angel investor and a banker is the banker wears a suit and can give you a toaster if you are nice.
Now, I am not talking about the friends and family type of angels who invest because they like you. I mean those angels who think they are slightly smarter than the VCs, but are just as risk adverse.
I don't blame angels for wanting to see significant traction and proving the model works before investing, but why not just call yourself a VC?
Personally, I think there is a hierarchy of funding:
Founder and friends/family
Idea, concept, prototype development, market research
then
Angels
System development, partnerships, monetization, operationalize
VCs
Market beyond initial contacts, stable version, profitability
Right now, the angels want to come after development, monetization and operationalization. This means founders and F&F have to carry a larger share of the initial funding, which means less companies make it to angels at low valuations.
It also means angels are seeing more and more of the simple ideas that can be implemented and monetized with less money. I don't know if they have also noticed many of these companies have very little potential to grow beyond a niche they have exploited and unlikely to grow towards an exit.
Ironically, this means the "safe" angel investment is actually not that safe. ¶ 9:43 PM 1 comments
Now, I am not talking about the friends and family type of angels who invest because they like you. I mean those angels who think they are slightly smarter than the VCs, but are just as risk adverse.
I don't blame angels for wanting to see significant traction and proving the model works before investing, but why not just call yourself a VC?
Personally, I think there is a hierarchy of funding:
Founder and friends/family
Idea, concept, prototype development, market research
then
Angels
System development, partnerships, monetization, operationalize
VCs
Market beyond initial contacts, stable version, profitability
Right now, the angels want to come after development, monetization and operationalization. This means founders and F&F have to carry a larger share of the initial funding, which means less companies make it to angels at low valuations.
It also means angels are seeing more and more of the simple ideas that can be implemented and monetized with less money. I don't know if they have also noticed many of these companies have very little potential to grow beyond a niche they have exploited and unlikely to grow towards an exit.
Ironically, this means the "safe" angel investment is actually not that safe. ¶ 9:43 PM 1 comments
Saturday, May 20, 2006
Welcome to the Adventure
Everyone has something to say, something to share, and probably a hope others will take the time to read it! So, I appreciate you reading this.
My goal with this blog is to talk about a couple of different subjects I care about professionally:
Thanks, Bob
May 20, 2006 ¶ 9:31 AM 0 comments
My goal with this blog is to talk about a couple of different subjects I care about professionally:
- Social networking, particularly as it relates to my new company Wakapa
- Social good, particularly as it relates to my experiences as a pioneer in online fundraising with companies such as eContributor.com, Network for Good, and Charity Aid Foundation (UK)
Thanks, Bob
May 20, 2006 ¶ 9:31 AM 0 comments
