Angel Investing Is Back

Published: 2/27/2007 10:51:04 AM, comments: 0

I think angel investing is back and will turn out to be even stronger and more pervasive than the last cycle of technology boom and bust.

The tech bust was not kind to angels.  There were many angels who were caught in cram-downs, wash-outs via pay-to-play rounds, or whose investments were simply shut down by the bigger investors.

Over the past few years, I've been seeing a steady comeback.  I can't point to specific numbers or quote statistics, but the mood and outlook of angels seems to have improved dramatically.  The sheer numbers of fresh faces at investing conferences, pitch events (AKA beauty contests) and angel group meetings has increased.

There is certainly a strong demand for angel money.  VC funds are only getting larger, which means there is less ability for VCs to place money early in the process - they simply don't have the time to make all the bets their huge funds require to justify their return expectations.

That is where angels are stepping in - at the very early stage of seed and smaller series A rounds.  Maybe that also means there is a whole new group that needs to be educated.  I'm also seeing more organization at angel investing conferences - more educational content aimed squarely at new angel investors.

I wish this bumper crop of angels much success.  Don't forget to do your due diligence....!

Don Jones

Lessons Learned - Angel Investing

Published: 2/22/2007 9:33:59 AM, comments: 0

An angel investor colleague of mine recently asked me, "What have you learned lately about investing in early stage startups?"

After tilting my head and looking up at the ceiling, I answered that I lately I've been seeing more entrepreneurs who get very emotional about their businesses, to the point of acting in strange and extreme ways that seemed otherwise out of character.

What was common to these individuals was that they had also been through the tech bust a few years ago, and had been scarred by the experience of being washed out, fired or "railroaded" in some way.

The point of my observation was that as an angel investor, it is valuable to learn about an entrepreneur's previous work situations and outcomes - it may provide insight into how they will respond when the new venture doesn't go as planned.

Don Jones

The Walt Disney Way - President's Day

Published: 2/19/2007 7:46:21 AM, comments: 0

So far in this series about Walt Disney, I've presented things that Walt did well:  his obsession with quality, never being satisfied, not being afraid to take smart risks, always looking ahead.  I'm generally a big fan of his legacy.

One area that he apparently didn't do so well was being a steady and consistent leader of large numbers of people.  On this President's Day, it's worthwhile to note that by most accounts, Walt Disney was a poor leader outside of his personal area of interest, the creative side of animation and entertainment parks.  Even in the creative side, his leadership was fraught with emotion and difficulty.

There are numerous stories of his capricious, arbitrary and conflicting directions to various senior staff members.  He would hire senior executives, and when he felt they were becoming too powerful, fire or demote them.  Even on the creative side, it was said that people trembled at trying to decipher whether he would like their interpretation of his directions or yell at them for it.

His public image was of a genial middle-aged creator of Mickey Mouse and a cast of characters.  His employees knew him as a temperamental, sometimes spiteful and ruthless person who could cast off long-time employees on a whim.  Some of the success of the Disney company came from the steadying influence of his brother Roy, who managed the financial aspects of the company.  At times, Walt and Roy erupted into intense shouting matches, other times Walt would order Roy out of the meeting in anger.

While Walt Disney was a creative icon of modern American culture, he appeared to be most happy with small groups of people.  As a president and manager of large numbers of people, he simply lacked the ability to scale.

Don Jones

The Walt Disney Way - Always Look Ahead

Published: 2/16/2007 9:48:44 AM, comments: 0

Walt Disney was a visionary in the entertainment business.  He changed the way cartoon animations were produced and greatly improved their quality, in every respect. 

He invented the modern amusement park, even after existing amusement park owners told him his concept would fail. 

How did he accomplish these feats?  It surely wasn't by being so focused on the daily grind that he couldn't spend time looking ahead. 

Disney was restless and usually dissatisfied with the current state of his business.  He seemed to constantly look for ways to improve his business, expand his offerings and do something new, something no one else had done.

Walt had the "pioneer spirit" of not being afraid to try something new.  In being a pioneer, he succeeded in reinventing himself and his company to achieve astounding success.

Don Jones

The Walt Disney Way - There's No Substitute for Industry Expertise

Published: 2/13/2007 11:04:40 AM, comments: 0

Walt Disney immersed himself in the industry of entertainment.  There really isn't any substitute for spending the necessary time to understand the dynamics of your chosen industry.

Even if you're a sales rep focused only on making your quota by month-end, you can benefit by learning more about your industry.  Are there publications you can read, people you can initiate contact with to ask questions or become a mentor to you?  Are there conferences and trade shows that you can go to in order to expand your contacts within the industry or segment that you operate in.  These sources of information and contacts can be invaluable ways to differentiate yourself from others who are less knowledgeable about the industry.

As a business owner, you can never know everything about your industry.  Competitive intelligence is always outdated.  Staying in touch with what is going on in the far flung corners of your industry isn't easy, but it's what will separate you and your company from the pack.

Don Jones

The Walt Disney Way - Take The Risk!

Published: 2/8/2007 11:36:43 AM, comments: 0

Walt was not afraid to take risks and make big bets.

Risk is a funny thing.  What is risky to one person is not to another.  Perception of risk also is determined by one's passion about the result of risk itself.  A person's life and financial situation, their belief systems about the chance for reward and the view of what they want out of life, all add to the mix of how much risk they will take on in any given situation.

Walt Disney was inextricably tied to his passion for providing higher quality forms of entertainment for the masses.  In all of his incarnations, from animator extraordinaire to feature film maker to Disneyland/Epcot amusement park revolutionary, Disney passionately believed in his product and the desire of large numbers of people to pay him for it, almost always in the face of doubters and skeptics.  In many respects, he identified so closely with his creations that to not build or create them would have been to virtually deny the main characteristics of his personality.

So a few questions for you:  how closely do you identify with your product or service?  What does that say about your risk tolerance for following through on it?  What are the other factors in your life that impact the risk decision?

My favorite thought to ruminate on is this:  Most elderly people surveyed believe they should have taken more chances in life.  They regret not really going for it.  Will that be your regret?

Ten Ways to Increase Your Chances of Raising Venture Capital

Published: 2/7/2007 10:23:20 AM, comments: 0

# 10 - The best time to raise money is when you don't need it!

It's a cruel and ironic offshoot of the old bank lender's saying, that they only want to lend to you when you don't need the money.  It's a good idea to keep this in mind when looking out to the future financing objectives of the company. 

Investors like to invest in companies that are doing well and meeting their milestones.  Keep interested investors informed of your progress so that next time you need capital, you'll know whom to call.  Since raising money usually takes 4 to 6 months, even longer if there are holidays during that time, you'll need to plan the beginning of your next funding process far ahead of time so you don't run out of money and have to take worse terms at negotiating time because you need the money so quickly.

A little planning ahead and staying in touch with investors can make the difference when it comes time to bank the next investment.

Don Jones

Southeast Venture Conference Notes

Published: 2/5/2007 3:05:17 PM, comments: 14

I attended the Southeast Venture Conference this week, which was held at the brand-new Umstead Hotel & Spa in the SAS campus in Cary, NC.  As previously reported, the first annual conference was sold out.  It was full of venture firms, technology start-ups and service firms looking to connect with dealmakers.

A couple of things struck me:

1.  There were very few local venture investors in attendance.  Most firms were from elsewhere - Atlanta, Boston and New York.  Some were from as far away as Chicago and even Silicon Valley.  A few random discussions indicated that there are probably only four to six active venture firms in the North Carolina region.

2.  Local entrepreneurial activity is solid.  As a result of continuous spin-out activity from the N. Carolina university and college systems, there is no lack of good quality start-ups in various stages of development.

3.  Angel activity is increasing, albeit slowly.  There weren't any angel groups represented in the sponsor list and I didn't meet any angels.  Anecdotal discussions with regional venture firms indicated that they did not receive much in the way of deal flow from angel groups.  The most-reported reasons were that the tech bust washed many angels out of the venture investing business.  There are some encouraging signs, as a few regional groups continue to increase their visibility.

Overall, the conference had to be considered a success.  Time will tell whether companies received funding as a result of the conference, and if so how much.  From a networking and general activity & energy level, the conference indicated a solid interest in entrepreneurial technology opportunities in the Southeast.

Don Jones

Don Jones
CEO, VentureDeal

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