Strong Opinions @marksbirch

Random thoughts from a NYC entrepreneur and investor about start-ups, technology and the people that make it all happen. Also find time for good tunes and good food.
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A few weeks ago, I attended an excellent event called Angel Bootcamp in Boston organized by Jon Pierce.  More events that help people get into angel investing are a positive for the startup community.  One such success story is that of David Tisch, now of TechStars fame, who had attended the same event last year and has made waves in the NYC tech scene ever since.

Angel Bootcamp is an excellent event for networking with local Boston investors and entrepreneurs.  There needs to be more events that bring angel investors out into the tech entrepreneurial community.  For too long, angel investors were stuck in formal angel groups where deals were tightly controlled.  This is particularly true of Boston which has numerous VC firms, but a dearth of actual angel investors (as evidenced by the strong VC contingent in the room).

It is probably not the best venue however for people looking to learn about angel investing.  There was lots of surface level discussion about investing, but no real depth in the mechanics and how of investing.  In the same way that first-time founders often get tripped up when starting out, most beginner investors get a rude awakening to some of the games played by both entrepreneurs and VC’s.  This is why I am a big proponent of the Pipeline Fund which really helps and mentors women in the world of angel investing.

That being said, there were some interesting tidbits that I culled from the various panels and discussions that I thought I would share.

  • “I just write checks.” – I really like Dharmesh Shah, but this was a curious sentiment.  Though he claims not to review deals (he has invested in 23 companies to date) or spend any time with them, I know that he does actually help the startups.  There are plenty of investors that simply write checks and act as dumb money, but I think the smarter money takes time to understand the founders, the market and the product.  If you put money into a startup, you have a responsibility to help them where it makes sense.  It is your money after all.
  • “Price does not matter.” – Some on the panel were split on this question.  I firmly believe price does matter however.  I invest with future investments in mind.  I want to make sure that a startup is able to get an uplift on valuation with every tier of funding, and if they start out high, this diminishes the upside.  Seed rounds where the pre-money goes north of $5 million have a much bigger climb ahead of them than startups that raise at a $3 million valuation.
  • “I do not follow-on investments.” – This was another Dharmesh gem.  I understand the reasoning as there is a signaling issue and a question of favoritism that could rub some entrepreneurs the wrong way.  I however take the approach that you fund the companies that are trending positively.  The vast majority of startups will not survive the seed stage, so better to close those out and focus on those investments that are looking the strongest.  As for favoritism, I figure that happens when I invest in some startups and not in others, so I am not overly bothered by that.
  • “Cultivate VC relationships.” – I firmly believe that to get any level of success as an angel investor, you need to know the funding ecosystem.  I want to help my portfolio companies to get to their Series A and beyond.  I want to know what other investors are looking at and what they are interested in.  I want to know of up and coming entrepreneurs are working on.  I cannot do this if I do not have my ear to the ground, and that requires knowing and establishing relationships with VC firms and other angle investors.

I would like to see Angel Bootcamp events in other areas of the US.  I think the concept is solid and with some tweaks, I think could really provide the type of community, knowledge and transparency that can gives angel investors in waiting the chance to be involved in supporting startups in this country.

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