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As Angel Investors Pull Back, Valuations Take a Hit

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Re: As Angel Investors Pull Back, Valuations Take a Hit

#111

Post by gmarx »

czr80 wrote: post #106
gmarx wrote: post #59

Earlier quoted context omitted.

Most of the ideas and products I attempted to get funded were around the idea of transforming the electronic medical record (in the broadest sense) from a mostly free text entity to a mostly well modeled discrete data entity. For more specific ideas I would be happy to discuss outside this board.

Thanks! It's a good idea, but I can see why it was hard getting funding - it's a difficult market to enter: a lot of people are trying to do this, including large well entrenched competitors, there's a high regulatory burden, and you're selling to a conservative customer base (doctors who need to change their working habits + hospital admin who need to make a significant investment). (I'm sure you know all of that, b…

Yep. I'm currently trying to figure out a "back door" to sneak in. I had a meeting with a VC yesterday (not to raise money) and she added an idea to one of my ideas and the result has me pretty excited. Of course, I've been here before ;)

Re: As Angel Investors Pull Back, Valuations Take a Hit

#112

Post by api »

anon8418 wrote: post #101
api wrote: post #76

Earlier quoted context omitted.

I've seen some things I'd have to tone down to sell as believable fiction, and this was several years ago doing consulting for startups. Standard issue asshattery include things like: - Paper-thin mock up demos of a product being misrepresented as actual finished sale-able product. Sorry but the V in MVP stands for viable . - Impressive people are touted as employees, even co-founders, and when you go talk to them it…

> - Products that would violate known laws of physics or proven mathematical theorems. (Or sometimes even grade school math...) Drop-Kicker just covered one such startup: http://drop-kicker.com/2016/01/ampy-move-teardown-and-review... This is from three PHD engineering students from Northwestern.... over $1.5MM raised via Kickstarter and investors. Hard to believe the founders (remember PHDs) are so naive to actually…

Wow. After reading that I personally call fraud. Even if there is any real tech behind the scenes, these people obviously didn't ship it to their Kickstarter backers. They hoodwinked Kickstarter as a source of easy money and then immediately turned that into VC backing.

Using people that way is textbook sociopathy. People are rungs on a ladder to be stomped on. Unfortunately it works. People fall for it again and again because they don't scratch the surface enough to see what's actually there.

Anyone interested in investing should take note of a few things here: highfalutin college degrees, patents (you can patent a cheese sandwich) or "patent pending" (which is trivial and meaningless), and unsupported claims of novelty are not reliable indicators of anything.

Re: As Angel Investors Pull Back, Valuations Take a Hit

#113

Post by jacquesm »

DenisM wrote: post #110
jacquesm wrote: post #108

Earlier quoted context omitted.

> So due diligence is happening after they decided to invest, right? Yes, usually this happens after the terms sheet is signed (and for smaller investments after a letter of intent is signed or a handshake deal is agreed upon). Up to that point it is read as true that everything the founder says will check out. The due-diligence process is there for two reasons: to fulfill the 'duty to research' for a VC to cover the…

Thank you for taking the time to answer my question! The reason I'm asking is that I keep imagining this picture: suppose there are 20 areas of economy(there are more but bear with me), and each angel knows one area well. Startups come at random from all 20 areas, so for 1 in 20 pitches the investor hears about something he understands deeply, can ask good questions and question assumptions. And so he can make an edu…

> Wouldn't that be a lot more efficient if investors just referred unknown companies to a buddy who knows the domain area?

That definitely happens. Most angels or VCs have a domain they are interested in and outside of that they will simply not participate or refer. Happened to me less than a week ago so definitely this occurs and fairly frequently.

> I don't see it happening.

It depends on how close to the fire you're sitting and who you are talking to I guess. In my 'backyard' it happens, frequently and the number of times that a deal is not even looked at is high enough that I never even thought this might somehow be special.

Another thing that will happen is that the party that did the referral will still take part in the round but at a much lower level.

This is a very fluid world you're trying to capture, local customers, connections and cliques will make up a lot of the background for such deals and you'd have to take all of those into account when you try to factor something like this into your worldview.

Personally I'd rather not see angels lose their shirt in areas that are not their domain,better if that money gets spent a bit wiser and on things that they understand.

Re: As Angel Investors Pull Back, Valuations Take a Hit

#114

Post by jkaljundi »

xmj wrote: post #78
jkaljundi wrote: post #70

Earlier quoted context omitted.

$50k gross is <€3k net monthly. There are quite many who make that, probably over 2% of the tech workforce (more than 2-300 people in Estonia). But even with €2k net your consumable income is bigger than for someone making $100k in the Valley.

Technically - $50k gross is, at current exchange rates, around EUR 3800 per month (before tax). But yes, once you reach EUR 2000 net, you can have a very comfortable lifestyle.

Yes, took account of who and how much pays taxes in US vs EE. We don't talk about net here.

Re: As Angel Investors Pull Back, Valuations Take a Hit

#115

Post by DenisM »

jacquesm wrote: post #113
DenisM wrote: post #110

Earlier quoted context omitted.

Thank you for taking the time to answer my question! The reason I'm asking is that I keep imagining this picture: suppose there are 20 areas of economy(there are more but bear with me), and each angel knows one area well. Startups come at random from all 20 areas, so for 1 in 20 pitches the investor hears about something he understands deeply, can ask good questions and question assumptions. And so he can make an edu…

> Wouldn't that be a lot more efficient if investors just referred unknown companies to a buddy who knows the domain area? That definitely happens. Most angels or VCs have a domain they are interested in and outside of that they will simply not participate or refer. Happened to me less than a week ago so definitely this occurs and fairly frequently. > I don't see it happening. It depends on how close to the fire you'…

My hunch is that most angels have random deals come to them, and most of those not being the specialty of this person, get tossed aside.

Then there is a group of angels who tag-team, and if one finds a deal he can't grasp, he would redirect to another member of the team. 12 people cold cover an area of expertise that's 12 times larger.

At least that's what I think should be happening... Does it?

Re: As Angel Investors Pull Back, Valuations Take a Hit

#116

Post by jacquesm »

DenisM wrote: post #115
jacquesm wrote: post #113

Earlier quoted context omitted.

> Wouldn't that be a lot more efficient if investors just referred unknown companies to a buddy who knows the domain area? That definitely happens. Most angels or VCs have a domain they are interested in and outside of that they will simply not participate or refer. Happened to me less than a week ago so definitely this occurs and fairly frequently. > I don't see it happening. It depends on how close to the fire you'…

My hunch is that most angels have random deals come to them, and most of those not being the specialty of this person, get tossed aside. Then there is a group of angels who tag-team, and if one finds a deal he can't grasp, he would redirect to another member of the team. 12 people cold cover an area of expertise that's 12 times larger. At least that's what I think should be happening... Does it?

Yes, pretty much. A single angel investing without a network is in dangerous territory, but that's the exception, not the rule. Most angels do have a network, that's also how you find them in the first place.

Re: As Angel Investors Pull Back, Valuations Take a Hit

#117

Post by DenisM »

jacquesm wrote: post #116
DenisM wrote: post #115

Earlier quoted context omitted.

My hunch is that most angels have random deals come to them, and most of those not being the specialty of this person, get tossed aside. Then there is a group of angels who tag-team, and if one finds a deal he can't grasp, he would redirect to another member of the team. 12 people cold cover an area of expertise that's 12 times larger. At least that's what I think should be happening... Does it?

Yes, pretty much. A single angel investing without a network is in dangerous territory, but that's the exception, not the rule. Most angels do have a network, that's also how you find them in the first place.

Perhaps the world is different, more optimal, in your neck of the woods. We've seen our share of angels coming up with all kinds of reasons to bail out, and never seen one saying "oh jeez, supply chain management is not my thing, let me ask Bob - he likes this stuff". I doubt they all knew the supply chain well enough to judge, but judge they did.

I hear what you're saying, it all makes sense. I just don't see it unfolding before my eyes.

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