Monday, January 12, 2009
99% of Angel Investors Don't Know Jack
Angel investing in startups is probably the most challenging form of private equity there is. Having been involved with the Tech Coast Angels for the last 10 years I have seen 150+ companies funded and very few successes. One thing I have learned over that time is that about 90% of the investors in each company "didn't know what they didn't know". Why? Unless you are full time investor looking at business plans all day long or have some particular domain expertise, angel investing will turn into a charitable tax exercise for you. However, the angel successful investments usually had these top 10 elements going for them:
1) Investors had to earn their right to be part of the investor syndicate and invest
2) Investor syndicates typically had less than 5 investors investing $50K-$250K each
3) The investor syndicate only had domain experts in the deal
4) All investors contributed contacts, industry knowledge or competitive intelligence
5) Investment was sourced through contacts and NOT blindly through random submissions
6) Sophisticated angels (like VCs) had looked at many other competitors from around the U.S.
7) Valuation was never an issue in negotiations and completing understood by both parties
8) The market was in a recession and lacked institutional Venture Capital competition
9) The management team had worked for previous start-up successes and failures.
10) The company had bootstrapped themselves into a beta product and had paying customers
Having investors who are unknowledgable about the game or industry creates numerous issues which I will expand on later.
A stealth internet advertising / publishing renaissance is quietly happening in Southern California 10 years after the dot com bubble ...
Today, there over 23 million sole proprietorships, 1.7 million traditional C corporations and 7.4 million partnerships and S corporatio...
Watch live streaming video from web20tv at livestream.com
Which 24 hour news network do you "trust the least" and is the "most biased"? #twitterpoll #CorruptMedia #FoxNews ...
Why are Australia and New Zealand bound flights taking off to the East at LAX between 10pm-12am and sometimes later? Loud low flying plane...
This is a story of my first channel crossing on a paddleboard in the Catalina Classic race Sunday, August, 29 2010. 32 miles of open oc...
The damage the Federal Reserve is destroying the price function of free markets and capitalism.
Twitter Poll: Did you change your vote for #Trump or #Clinton based new FBI investigation of #weinergate #TwitterPoll ? — je...