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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

#31

Post by czr80 »

gmarx wrote: post #27

Whenever I see articles about how easily the investment money flows or had flowed all I can think of, from a purely self-centered point of view, is "what kind of loser am I that I have never been able to raise a single round?" Seriously, my ideas aren't objectively stupider than the ones I see funded. Even in this article, I mean, home eye exams? Did I read that right? How about a startup that will come to your house…

Feel comfortable sharing one idea? Just curious, completely understand if you'd prefer not to.

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

#32

Post by vonklaus »

czr80 wrote: post #31
gmarx wrote: post #27

Whenever I see articles about how easily the investment money flows or had flowed all I can think of, from a purely self-centered point of view, is "what kind of loser am I that I have never been able to raise a single round?" Seriously, my ideas aren't objectively stupider than the ones I see funded. Even in this article, I mean, home eye exams? Did I read that right? How about a startup that will come to your house…

Feel comfortable sharing one idea? Just curious, completely understand if you'd prefer not to.

Search. Turns out everyone was wrong. The next google is actually a google.

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

#33

Post by gbasic »

gmarx wrote: post #27

Whenever I see articles about how easily the investment money flows or had flowed all I can think of, from a purely self-centered point of view, is "what kind of loser am I that I have never been able to raise a single round?" Seriously, my ideas aren't objectively stupider than the ones I see funded. Even in this article, I mean, home eye exams? Did I read that right? How about a startup that will come to your house…

While I agree with much of the sentiment (esp in today's Silicon Valley), there are a bunch of caveats:

- A lot of ideas sound dumb when they first come out

- A lot of signals are used to decide which companies to invest in (I don't agree that this is right, but it's easier to get cash when you're in a prestigious incubator, or graduated from a top eng school)

- Many successful companies are a good idea, a good market, and good execution - so an idea is just a (limited) starting point

They're some really (what I consider) dumb ideas out there (esp in the seed part of the space), but I wonder to what degree the unicorns are actually good ideas that raised way too much - and tried to grow way too rapidly.

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

#34

Post by draw_down »

gmarx wrote: post #27

Whenever I see articles about how easily the investment money flows or had flowed all I can think of, from a purely self-centered point of view, is "what kind of loser am I that I have never been able to raise a single round?" Seriously, my ideas aren't objectively stupider than the ones I see funded. Even in this article, I mean, home eye exams? Did I read that right? How about a startup that will come to your house…

Nothing about any of this is objective, though.

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

#35

Post by arebop »

tyingq wrote: post #16
aetherson wrote: post #13

Earlier quoted context omitted.

Median income in San Jose is $80k, so 50% of all households make less than that. $100k does not mean you're barely capable of breaking even. For any reasonable amount of income, it is possible to spend in such a way that you're barely breaking even, of course. But this whole meme of six figures is hard to keep afloat with is the worst kind of cringe-worthy "Oh poor well-paid me." My wife works at Habitat for Humanity…

>>and no, they aren't all living with their families or have spouses helping out Honestly curious...what are they doing then? Isn't the typical rent cost higher than the entire salary of a low level employee at a charitable org?

Rent control, or they bought a long time ago.

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

#36

Post by subdane »

gmarx wrote: post #27

Whenever I see articles about how easily the investment money flows or had flowed all I can think of, from a purely self-centered point of view, is "what kind of loser am I that I have never been able to raise a single round?" Seriously, my ideas aren't objectively stupider than the ones I see funded. Even in this article, I mean, home eye exams? Did I read that right? How about a startup that will come to your house…

As a founder who has raised both angel and institutional $$, these articles can have the same effect on me. For nearly everyone, raising money is hard, especially in the beginning. Uber had trouble closing its first money. There's a lot of luck, hard work and network involved in getting $$ in. The first money is less about idea and more about reputation and hustle.

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

#38

Post by potatolicious »

tyingq wrote: post #26
djcapelis wrote: post #25

Earlier quoted context omitted.

For a luxury condo in downtown SF? Yes. That's not where the people who work for a living at charitable organizations live. HN is a weird bubble.

Heh. No, I looked up the average rent for Oakland, which I assumed would be less expensive than downtown SF. I saw $3k, which would likely be higher than the take home pay for a low-level employee.

Averages aren't really representative - even in SF there is a very, very wide variance between a crappy run-down studio in an undesirable neighborhood vs. a luxury condo in the hottest neighborhoods. The average is really just tossing those two in a blender and hitting the "puree" button.

Likewise, there are still cheap places to live in Oakland, even if the average is high (and rising). Also, there are places further out of Oakland that are still relatively inexpensive.

In any case, the "typical rent" on a SF/Oakland apartment already affords a lifestyle more luxurious than most people in this country ever experience, which is why IMO aetherson is right in calling it "Oh poor well-paid me". This meme that 6-figure incomes in the Bay Area is "break even" is a special kind of myopic: "Oh dearie me, I'm making 6-figures, enjoying quality of life way higher than is typical for my country, but I'm just breaking even!"

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

#39

Post by CPLX »

criddell wrote: post #22
CPLX wrote: post #18

Earlier quoted context omitted.

> However, I'm not at all concerned about the stock market. That has never influenced my decision to fund a company. You may be the exceptional person who has no assets whatsoever tied up in the stock market, but nearly every investor who has the resources to be an angel will have money in the market. When the market falls they have less money. They use money to invest in things. The correlation between the market an…

> The correlation between the market and seed stage investing should be fairly direct and clear. The money can only be in one place at a time though. If you pull money out of publicly traded stocks, wouldn't that mean you have more money for angel activities? Although, when the market is way down, that's a great buying opportunity, so is that when angel investors stop putting money into startups and instead go on a s…

You're arguing that they are substitute assets for each other that might move reciprocally, like stocks and bonds are. But equity at seed stage and public stage are the same asset class at different levels and move more in tandem.

My argument was more about the wealth effect though, which is that a crash in stocks makes Angels poorer and thus less likely to invest in risky startups.

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

#40

Post by cookiecaper »

dsacco wrote: post #2

As an angel investor, I can anecdotally confirm that I've become more cautious recently (in the last year, really). However, I'm not at all concerned about the stock market. That has never influenced my decision to fund a company. My belief is that a strong company can weather a bear market. I'm concerned with the current state of valuations - I enjoy giving investments to companies on the order of five figures or so…

>I do think that there will still be plenty of capital ready to be given to companies, investors are just going to be more selective (read: cautious) about it, which may very well change the growth and success potential of certain more dubious business models in the valley.

With so many SV companies that have hit it big without any real idea on how they're going to make money some day, it'd be interesting to hear what passes for a "dubious business model" out there.

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