Saturday, July 13, 2013

The best way to end up with $1m as an Angel?

At the 500 Startups’ PreMoney Conference in June 2013, Superangels and Series A investors discussed trends and disruptive models for modernizing venture capital. 

Accelerators such as Y Combinator are providing start-ups with operational expertise by connecting current classes with their alumni, creating significant impact despite relatively little capital invested.

VCs are under pressure from their LPs to reinvest their management fees and add value to their portfolio companies, and ever shorter technology cycles reduce the half life of the VC’s own operational experience. First Round Capital has taken the YC model and has launched a closed network for all employees in their portfolio companies. Andreessen Horowitz has hired more than 50 people to help their ventures scale.

Investment sizes and participants in the early funding stages continue to undergo significant shifts. The Series A investment sizes of the top VC funds have increased and entrepreneurs are being forced into larger rounds. As Paul Graham succinctly stated, ‘Series A has become the de facto Series B’, and Marc Andreessen added ‘the seed funds are becoming the new VCs’.

Angels have piled into an unprecedented number of opportunities in the past years, resulting in a significant overhang of funded start-ups. Aydin Senkut from Felicis Ventures identified ‘the shadow series A crunch based on convertible notes’ as one of the unresolved and untalked about issues for the coming years.

So what is the best way to end up with $1m as an angel? As for the here and now, Elad Gil answered his own question with ‘start with $2m’ and concluded ‘it’s a bubble when the good looking people start showing up at tech parties.’

Postscript: Jeff Lawson of Twilio gave the most inspiring talk called 'we are software people'.