1. Via Angellist syndicates it will be easier to raise up to $1 Million (maybe half). So you will have a bunch of companies that get funded via this super series/seed/angel model.
2. Then they will hit a roadblock, they will not get any $10-$20 Million to fund growth or get a true product/market fit.
3. The vast majority of the companies from step 1. will be wiped out because even if they have a hint of product/market fit, they will not get funding.
4. The tiny minority from step 1. that can get funding for Series B. in the range of $50Million or more will wipe out all other startup in the category and capture all the gains. This in turn means a16z and the likes will be able to extract a lot more stake out of the angels and the founders.
Net net, won’t be surprising if angellist and other crowd funders end up losers in the process and returns go to a16z and their compatriot VC’s.
Love VC double speak in the article. You know how politicians talk, when they have to pass some unpopular law they invoke the common man and the small business owner. Scott Weiss from a16z is a standup guy. Always fighting for the engineer founder. Fucking those MBA types since the beginning. Please elect him to be your VC. If AirBnB showed up at a16z do you think he would turn them down (non-engineering, MBA type company). Yeah, didn’t think so :-)
Re AirBNB, (a) we are an investor in AirBNB, and (b) the founders are extremely sharp product people and technically very deep. The CEO is a designer by background, like Ben Silbermann at Pinterest, another investment of ours. Both are hypercompetent product people with deep technical chops.
Crave just raised $2.5M on AL - see http://blogs.wsj.com/venturecapital/2013/09/19/50-shades-of-...
Crave is showing lots of fit - market or otherwise.
With AL syndicates, getting to $5M for a hot startup on AL will be a cake walk. All you need is for a few of the top syndicators to get excited about you and you're at serious money. In fact, some of them are actively contemplating that possibility: see http://www.linkedin.com/today/post/article/20130928204536-24...
I don't think it proxies that well. As the article points out, a16z raised a $1.5 billion fund, some top-tier firms might come close, but most of the mid- and bottom-tier VCs operate with the fund sizes in double-digit millions.
Also, for a highly contested B round, A round participants or brand-name VCs will get preference over a generic nondescript firm with a Sand Hill Road address.
Somebody from YC might correct me on this, but I think a16z's participation in automatic round upon admittance to YC comes with drag-along rights, which they can choose to exercise at either A or B rounds. So they don't have as much of a problem of missing on quality dealflow that others will miss on if they choose to skip A rounds.