David Beisel, an Associate with Masthead Ventures, asks VCs and Angels, Where are the Angel Bloggers? when mentioning the results of a survey from Lab2Ipo regarding the role of Angels in the Venture Capital process. Not surprisingly, the survey highlights the positive contribution of Angels to the VC industry, with "unrealistic company valuation" sometimes keeping the two apart. David comments:
[..] angels are indeed extremely beneficial to
venture capitalists, as they are an integral source of seed capital and
support for entrepreneurs seeking levels of financing that are still
as-yet too small or risky for institutional involvement. And yes, the
issue of valuation is a viable reason for the tension between the two
groups. I personally have seen a number of deals where the previous
angel round and future expectations were at valuations that didn’t
match our own.But I believe that there is a deeper issue at play here – perhaps
the tension also arises from lack of communication, as Stanco has
suggested. Could we have an opening of the dialog in the
blogophere as a new public forum to address the issues between angels
and venture capitalists? We now have a mechanism to air our
thoughts openly in bridging the gap in perspective between the two
groups that wasn’t available with this audience just a couple years ago. [...]
The issue with establishing a dialog is that whilst there are quite a few VC bloggers, Angel investor blogs are few and far between – and the ones I am listing below don’t really "theorize" much about their investment process/strategy/… not that they need to. My personal approach is that the startups I invest personally don’t need to be disclosed until such time that a conflict of interest might arise. For example, I would never trumpet one of my investments without disclosing it first.
Back to the A number of VCs make angel investments (except when the rules of their
partnership prevents them from doing that) which means that quite a few VCs will double as Angel bloggers. Who amongst active angels is blogging ? Mark Cuban, Esther Dyson, Joe Kraus, Loic Le Meur, Joi Ito, Nick Denton, Mark Pincus, Andrew Anker,…
Anyone else you can think of ?
A word on the issue of valuation gap: many of the seed investments I have seen (or participated to) recently are using a a convertible note which offers a discount to the Series A price. Which means that the company can be priced later by VCs.