Fine, if you have the choice.
Angels flee from startup investments
11–19 of 19 posts
Re: Angels flee from startup investments
#12Most angels are such a bunch of pompous amateurs. If I was put in a position where I was broke and had to raise a small amount of money to start my bold new venture, I would get a minimum wage job and burn through my nights and weekends. The agony of the minimum wage job would give me real impetus to make the business work, and it would be far less ridiculous than constantly explaining business decisions to some guy who sold a company for $10m (or worse, inherited money) and now considers himself a "player."
Don't get me wrong, there are some wonderful angels out there -- for example, accomplished university professors (a secretly wonderful reason to go to college, even if you are career-obsessed and don't care for a liberal arts education or hooking up with confused 19 year olds), or successful veterans of the field in which you are operating (such as Aydin Senkut, referenced in that article, or our good friend pg) -- but on the whole, the "angel investor" industry is a total waste of time, and a total distraction.
Also, from what I hear from VC friends, some angels can make your Series A a real pain; they don't pay to play, and they get antsy about dilution. I'm sure pg would have more insight on this matter than I.
Re: Angels flee from startup investments
#13Most angels are such a bunch of pompous amateurs. If I was put in a position where I was broke and had to raise a small amount of money to start my bold new venture, I would get a minimum wage job and burn through my nights and weekends. The agony of the minimum wage job would give me real impetus to make the business work, and it would be far less ridiculous than constantly explaining business decisions to some guy…
that's just not a fair comparison. despite how you may feel about angel investors as a whole, working part time is not equal to working full time. you can accomplish a lot working nights and weekends, but it's generally difficult work, not nearly as productive, and does not have the same urgency -- it's very easy to take a few weeks off from a part-time endeavor, or just to stop working on it altogether.
we've also been very happy working with angels, but it might just be that we've been lucky enough to have great investors.
based on my experiences, i would highly recommend finding a way to work on your business full time as soon as you can.
Re: Angels flee from startup investments
#14Earlier quoted context omitted.
Actually, I think the basic idea has a lot of potential and could be a fine business. There's several different revenue models and the costs could be pretty low relative to a lot of other types of startups. The bigger question is why they needed to raise $715k and still needed more.
That was really the thrust of my question. Why was that amount of money to start up a good investment?
I'm baffled too. The Internet Archive first crawled the site in June 2007, so let's be generous and say they were in business for two years (NYTimes article mentions they closed).
Stunning hubris.
Re: Angels flee from startup investments
#15"For TwoSmartDogs, an Internet start-up in Los Angeles that was building an online hub for adult education classes, this sudden pullback was disastrous. "In 2007, the company raised $715,000 in its first round of angel financing from eight investors. When the founders approached current and new investors for more capital in September, they were met with silence." Why did investors think this http://www.twosmartdogs.c…
teachstreet.com attracted funding from Madrona (a pretty solid VC firm) as well as Dave McClure, I think. Same thing, I suppose. Bounce around craigslist for a bit and see how many people are buying and selling lessons. It's a big business.
A good percentage of those are scams, eg: "Spanish tutor wanted." They advertise for some lessons from someone likely to be semi-desperate but with a bank account. Then they kite a check from a stolen bank account for twice the amount to the sucker, and ask them to pass the rest to the "nanny". The child of course never appears.. and they say "oh, keep the money." They play on greed and fear to rope the sucker into doing the most dangerous part of the fraud and to keep quiet later.
Seriously. Answer ten teacher wanted ads and 2-3 will be scams of some sort.
Re: Angels flee from startup investments
#16angels can bail on a shitty market because most of them are just doing it for vanity anyway (as numair points out, they want to be "players"). the VCs are tied to the business model for life even though many of them are selling off sections of their worthless portfolios.
the core reason remains the same: no one is making money. and for so many startups that are going are going the "freemium" route, the numbers are laughable, i could net as much in a year cutting lawns. one wonders why high finance is involving itself in what is increasingly becoming a nickels and dimes game.
Re: Angels flee from startup investments
#17"For TwoSmartDogs, an Internet start-up in Los Angeles that was building an online hub for adult education classes, this sudden pullback was disastrous. "In 2007, the company raised $715,000 in its first round of angel financing from eight investors. When the founders approached current and new investors for more capital in September, they were met with silence." Why did investors think this http://www.twosmartdogs.c…
Not all investors are smart. Maybe they were tricked with a really slick powerpoint presentation. With comic dogs and everything.
I've seen much less deserving people get much more money from prestigious and successful VC companies. Don't underestimate a great sales pitch.
Re: Angels flee from startup investments
#18[deleted]
Re: Angels flee from startup investments
#19"It’s getting tougher for companies to raise money, but I think the good ones are still getting it done," said Ron Conway. I think that's key... certainly, some opportunities that were worth a shot when everyone was flush with cash are now untouchable, but angels, like all other wealthy individuals, are still looking for good business opportunities. Convincing them might be a bit harder and require a somewhat more "t…
Absolutely.
I think it's for the best, because it has only reinforced our scrappy cockroach nature, but our 'looking for angel funding' was pretty much simultaneous with the meltdown, and things are definitely slower than they would have been had there not been said meltdown.
That said, we have been able to keep conversations going, and I believe it's because we have a number of viable business models in the works.