

Angels flee from startup investments - amrithk
http://www.nytimes.com/2009/02/03/technology/start-ups/03angel.html?ref=business

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swombat
_"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 "this start-
up will make money, here's how" approach, but it should still work.

~~~
wensing
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.

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shafqat
If you can demonstrate a well-considered revenue model (i.e. cash, not
eyeballs), there is still plenty of money going around. We raised a seed round
in October, and it was actually much easier than all the doom and gloom you
read about angel money drying up. I think the key was ensuring there is real,
hard cashflow opportunities.

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tokenadult
"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.com/>

was a good business opportunity in the first place?

~~~
ryanwaggoner
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.

~~~
tokenadult
That was really the thrust of my question. Why was that amount of money to
start up a good investment?

~~~
trevelyan
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.

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numair
Most 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.

~~~
chris
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.

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rw
Fine, if you have the choice.

