
Do You Know What an Angel Investor Is? - clarkm
http://www.dilbert.com/blog/entry/do_you_know_what_an_angel_investor_is/
======
diego
Scott Adams is wrong. There are angel investors who invest in unproven
companies, even at the concept stage. I'm one of them, and I prefer to invest
in people. There are people who I'd invest in before even knowing what their
companies plan to do.

~~~
danielweber
Every Scott Adams post about CalendarTree makes me wonder if I'm reading
marketing for CalendarTree.

~~~
forgottenpass
So just like any other post on hacker news by someone with a product?

The "my experiences with product X as diving board for tangential point" is
probably one of the less annoying positions on a scale that runs all the way
from "pitching hard" to "cleverly designed to disguise relationship to the
product."

Don't get me wrong, a lot of them are incredibly gross to witness, but to me
this one barely registers.

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tptacek
I'm still not sure Scott Adams knows what an angel investor is. That, or I
don't!

As I understand it, the real difference between angels and VCs is that angels
invest without locking down a valuation, and angels invest without demanding
control. A VC round comes with a firm valuation and with a board seat.

~~~
patio11
Angels sometimes invest in priced rounds. Convertible notes are a newer thing,
and not yet 100% universal.

The biggest difference, traditionally, is that angels invest their own money
or that of buddies, and that VCs invest the money of LPs. This is a little
weirder these days, as there are super-angels/micro-VCs/whatever-their-
business-card-says where that starts to become a distinction without a
difference.

~~~
tptacek
So the answer is, mostly, that I don't know what an angel is. :)

~~~
purringmeow
You do, it's just that the term is pretty encompassing :)

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andrew_null
There's a few points which sound right in this essay, but I'm surprised he
didn't discuss the more technical definition and its impact on the ecosystem:

1) an angel investor is someone who invests their own money 2) a venture
capitalist invests out of a fund, which is mostly other peoples' money (OPM!)
while taking a fee + economics from the fund (the famous "2 and 20" model)

But that's not too useful, because what's important are the behaviors that
come out of the situation.

Because most angels are investing their own money, they usually don't have
crazy amounts of capital to work with. Thus, they usually invest early so they
can get a better percentage at a lower valuation.

Many VCs also invest early, sometimes exclusively so with smaller funds, but
they are often called "seed funds" to make that distinction. A fund which
invests OPM is never called an "angel" regardless of what stage they invest
at.

And finally, big funds (managing 100s of millions of dollars) are what we
think of usually as venture capital.

(Funds that invest even larger amounts at higher valuations are often referred
to as "late stage venture capital" or "growth capital." And there's more
specialized terminology later stage since more specialized financial
instruments can be brought into play - SPVs/debt/mezzanine/etc)

Where Scott's essay rings true is that idea that investors of all classes are
more risk averse these days- they prefer to see traction since the cost of
building an app/website is rapidly decreasing. Thus, they are all behaviorally
acting like "traction investors" rather than "idea investors" whereas in the
past, traction investors purely consisted of the growth capital guys.

This might be worse for the ecosystem since people want you to have everything
built before taking in our first dollar of investment, but you could argue it
means the ecosystem's $s are being allocated more efficiently also.

------
greenyoda
_" I have a degree in economics, an MBA from Berkeley, and over 30 years of
business experience. Do you know what question I hear in Silicon Valley nearly
every time I meet with potential investors for CalendarTree?"_

I would have supposed that Scott Adams has become quite wealthy from the
Dilbert strip, his many books and all the spin-off merchandise (calendars,
toys, etc.). Why would he need to look for outside investors to fund his app
rather than just investing his own money? And if he's not willing to risk his
own money to start his new business, what message does that send to potential
investors?

~~~
noahc
Investors understand risk management. It is possible he knows he needs 15MM to
go for the home run, but doesn't want put in the 15MM himself and go bankrupt
in the process. Investors allow him to shoot for the moon.

Also, investors help with accountability, pushing through tough spots,
connections, advice, etc. Investors also add credibility that 'rich white guy
throws money at project' doesn't give.

~~~
greenyoda
Seems like you could write a shared calendar app for way less than $15M. And
it's already in beta, so a lot of the development has been done already.

I also wonder how much success he's going to get selling to enterprise
customers. Any company with over 200 employees already has a calendar system
(Outlook or some cloud equivalent).

~~~
adventured
Pretty sure the $15 million referred to a long-term bet, that takes years to
get through the burning cash phase and into profitability.

If you hire 20 people for the first year, that's going to cost three million
dollars (if you're lucky) for everything all-in, without calculating
potentially high customer acquisition costs early on.

Writing the calendar app is the least expensive, least difficult and least
time consuming part of building a large scale business around it.

If you wanted to go big, and had three years to do it, you could easily burn
through $10 or $15 million trying to get there before generating your first
quarterly profit.

------
danilocampos
"If I had to guess, I'd say Silicon Valley would be among the easiest for
women to penetrate"

This is not an opinion grounded in any sort of reality. Attrition for women in
technical roles is nearly double that of other industries. In finance, women
make up around 20% of corporate boards. Not so in tech. Not by a long shot.

This is Scott Adams saying "hey guys, here's some stuff I think but haven't
really tested even a little bit."

~~~
probably_wrong
> This is Scott Adams saying "hey guys, here's some stuff I think but haven't
> really tested even a little bit."

For non-regular readers: that's _exactly_ what Scott Adams' blog is about -
throwing ideas into the wild and discussing them in the comments. It's a
feature, not a bug.

The problems come when people read it without knowing that, and assuming he's
advocating for <issue>, while he's more of a "what do you think about this
crazy thought?" kind of writer. Check this post[1] (specially the disclaimer)
for an example.

[1]
[http://dilbert.com/blog/entry/proof_almost_of_intelligent_de...](http://dilbert.com/blog/entry/proof_almost_of_intelligent_design/)

~~~
danilocampos
That may be so, but I think it's not a little pernicious for someone with
standing and reach to say "Hayyyyy, so, I'm sure everything's FINE" when
everything is not at all fine. Sloppy and counterproductive.

------
joshu
No. Angels invest their own money.

I assume that he can't get interest in his idea because folks are dubious
about the idea, but are willing to be disproven ("come back when you have some
traction")

------
_ix
...Who is Nikki _Durbin_?

~~~
loisaidasam
Agreed, would be nice if the author used the correct name.

------
edoceo
Boo popups

------
michaelochurch
_If I had to guess, I 'd say Silicon Valley would be among the easiest for
women to penetrate_

In the average relationship, the male is 4 years older than the female. That
means that women (as a group, even if their individual dating patterns differ)
have a "look-ahead" insight into which careers turn out well (medicine, law)
and which promise the moon but fall flat (startups, academia).

Among a group of 21-22 year-old college-senior women, at least a few have
dated 24-27 year-old guys, so they know a lot more about the career landscape
than the 21-year-old men, who've been dating 18- to 20-year-old women.

That's why there are no women (except for hand-picked pretty tokens) playing
the VC-funded game. They have the look-ahead information, and they're smart
enough to see the VC-funded "tech world" as a fraud and not get involved. It's
clueless men who get in, wreck their careers, and find themselves with no
other options.

~~~
nostrademons
Law is a terrible career these days. Talk to folks just getting out of law
school about what their career prospects are like, don't talk to folks who are
lawyers. The latter have already cleared numerous weed-out processes (getting
into law school, getting through law school, getting a job after law school)
that chew people up and spit them out. About 20-25% of T14 law students (and
virtually none from lower-tier law schools) make it to BigLaw positions paying
$160K/year. The rest become small-town attorneys, public defenders, assistants
in the DA's office, or go to work for boutique law firms. These positions pay
about $40-75K/year, barely more than a public schoolteacher, and yet they have
law school loans to pay off. Even if you do get a BigLaw position, it involves
being some partner's bitch for 7-10 years until ( _if_ ) you make partner
yourself.

Medicine is a decent career if you get through it and can deal with the hours,
but it also has a massive weed-out funnel. At my (top liberal-arts college)
alma mater, the admissions department had a joke: "95% of you are pre-med. By
graduation, about 2% of you will be pre-med."

This is also why your main thesis, about women having an information advantage
about the career world because of their relationship partners being older,
doesn't hold. There is a strong selection bias in relationship partners.
Lawyers find it much easier to find girlfriends than unemployed law-school
graduates who went back to live with their parents. Anyone who uses their
personal relationship choices as data on how the employed population as a
whole functions is getting seriously biased data.

~~~
geebee
I can't really disagree that law is an unappealing career choice these days.
However, I'd say getting getting _through_ law or med school at the elite is
pretty well assured once you get in. Here are the numbers for boalt

[http://berkeley.lawschoolnumbers.com/](http://berkeley.lawschoolnumbers.com/)

First Year : 2.0% Second Year : 1.7% Third Year : 0.3% Fourth Year : 0.0%

here they are for stanford

[https://www.law.stanford.edu/facts/enrollment-data-
transfer-...](https://www.law.stanford.edu/facts/enrollment-data-transfer-and-
attrition-rates)

1st year 0 3 3 1.7 2nd year 0 2 2 1 3rd year 0 0 0 0 4th year 0 0 0 0

Here are the graduation rates for UCSF med school

[http://saa.ucsf.edu/sites/saa.ucsf.edu/files/PDF/WASC/Append...](http://saa.ucsf.edu/sites/saa.ucsf.edu/files/PDF/WASC/Appendix%2033.%20Program%20Graduation%20Rates%202006-2009.pdf)

(UCSF-medicine has a 99% graduation rate).

~~~
nostrademons
Yeah, I should probably de-emphasize "getting _through_ " law school in favor
of getting into law school and getting a job after. Last I heard getting into
a T14 law school was still quite challenging, and even then getting a well-
paying job was far from assured.

~~~
geebee
I'm, very, very late responding to this, so apologies for that.

I agree that getting into a top law or medical school is exceptionally
difficult. Here's the admissions page for ucsf

[http://meded.ucsf.edu/admissions/successful-applicant-
profil...](http://meded.ucsf.edu/admissions/successful-applicant-profile-
class-2017)

Interestingly, they don't give admissions rates, but we can see that only 6%
even get an interview. The numbers themselves are high, too. Looks like about
95%ile MCAT scores, and a high (nearly 3.8) GPA overall and in the sciences.

Law has similar numbers, though LSAT scores tend to be a bit higher - above
98%ile. My guess is that this is because law doesn't have the "weeder" courses
in pre-med, so you do have a lot of high GPAs in history or other relatively
easy majors.

Engineering is a very, very difficult comparison to make, because it truly is
not the same thing. Licensure is unusual, largely limited to a couple of
specialties, and happens (with exceptions) at the undergrad level anyway.
Legally speaking, you don't _need_ an MS or PhD for anything, and you rarely
need a BS either. This of course is a big factor when thinking about
admissions and attrition rates.

Still, there is a large PR effort in the US to convince the public and young
people that there is a shortage of US Citizens going into "STEM" graduate
programs. I've posted a link to a RAND study that concludes that this aversion
is rational and market driven when you consider the pay and career prospects
relative to the "professions" (medicine and law, as well as dentistry, MBA
programs, even nursing and pharmacy... in SF, dental hygienists earn, on
average, about 98% of a software developer's median salary).

Here's a link the RAND study

[http://www.rand.org/pubs/issue_papers/IP241.html](http://www.rand.org/pubs/issue_papers/IP241.html)

It's very difficult to compare with graduate engineering programs, since they
tend to be specialized at the degree level (rather than through residency in
medicine or career choices later with law). But looking at entering class
profiles, top engineering programs appear to be very selective. Not _as_
selective in terms of admissions rates as medicine or law, but I think this is
more a function of very heavy course requirements for admission (you can major
in anything for law, and you can do pre-med in 2 years, whereas to apply to an
MS or PhD program in engineering, you tend to need essentially 4 years of
exceptionally difficult specialized coursework).

So admissions aren't really notably easier for graduate work in engineering,
undergrad prep is very hard... and yet, attrition rates are brutal. Overall,
engineering is the best of the bunch where PhD attrition rates are concerned,
at about 35%. In hard sciences, these typically go up to about 50%. This is
for a cohort that has gotten top grades in majors like physics and scored at
least above the 90%ile on standardized tests, usually quite a bit higher.

In short - I'm willing to agree that getting into law school is tough, but not
any tougher than getting in to a top grad school in engineering (probably much
easier, when you consider the coursework you need to take for engineering),
and getting _through_ law school, based on attrition rates, appears to be
_far, far easier_. Even med school appears far easier from an attrition rate
point of view. They're hard working, sure, but so are grad students in STEM. I
just don't think hard work can explain a difference in attrition rates between
50-100 times higher.

Of course, like I said, you don't need a PhD or an MS to do anything in
engineering, so maybe they're not really useful as a point of analysis here.
The reason I bring it up is that there is still a strong PR push to get more
young US citizens (or these days, women) into STEM graduate programs, and yet
the numbers are horrendous for that path. Difficult coursework, sky high
attrition, and - at the elite level, since we're talking about "best and
brightest" \- mediocre outcomes compared to medicine and, at the elite level,
perhaps law as well (and many other fields).

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eridal
nice pun by the end.. I see what you did there ¬¬

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alexeisadeski3
Every single real or perceived slight is a result of one's
gender/color/orientation. We all know that white men are never slighted.

