It's funny how much time people actually can spend categorizing things. At the same time, I believe this discussion is relevant from an entrepreneur's standpoint as you want to know whom you are dealing with. Brad has an interesting post about what defines a business angel. He's also bringing up the term "Super Angel" which I don't believe he's coined but I am hearing ever more. Most recently at the Seed Summit held by Seedcamp, the topic indirectly came up in a discussion amongst a fairly large group of angels gathered in London. What defines an angel and what are these new super angels all about? Well it's basically determined by the size of their investments and how many they make. Brad defines a typical angel as someone making an equity investment at least once a year amounting to $25k for the past four years. A super angel has invested at least $50k twice a year for the past three years. I guess you can stretch these parameters in many directions and come to your own conclusion about who is what. I believe it's simply most important to understand who is investing in your company at the seed stage. If it's a typical business angel, you will obviously get less money and probably not necessarily as much support (although this obviously varies from angel to angel). With a super angel, you'll have access to more funds and hopefully have more support as these guys are probably doing this full time. I think actually that's the biggest determinant from my perspective. A typical angel is doing his investing on the side. A super angel is probably going to be doing it full time. Now you also have what are called Super Angel funds establishing themselves. These are funds which pool angels money and tend to focus on seed stage investing. They are basically much more structured than single individuals but are also filling the gap between angels and VC's. Do you need to dwell on this long as an entrepreneur. Probably not but I think it's good to define a bit who the angels are and make it easier to determine what you can expect from whom. Particularly in Europe I believe these super angels and super angel funds are starting to replace seed stage VC's, a dying breed. This is the trend I am keeping my eye on.
Babbling VC
Never settle! Only compromise when it helps you achieve your goals! Never give up!
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Take-aways from LeWeb09
Spent two days at LeWeb09 in Paris and I thought a list of my thoughts would be a sufficient summary:
1. The mood was tired and downtrodden. People weren't necessarily in a bad mood but I've never heard more "I'm tired's" than I did this year.
2. Generally people were upbeat about the start-up industry. 2010 seemed to offer good prospects when listening to people talk about their plans.
3. VC's were most concerned about raising future funds. Almost everyone noted how hard it is or is going to be to get future funds raised. Almost everyone saw the most hurdles for funds focussed on seed and early-stage in general.
4. Business angels are playing ever greater roles in the seed space and more have shown up. At the same time I started hearing a lot more complaining about their terms and behaviour. "Lifestyle angels" were seen as a burden at times.
5. In Germany, Berlin is where it's at. London remains the European hotbed. Heard almost nothing about Southern Europe. The Scandics are coming back.
6. Mobile remains the space where people see the most opportunity. Still hard to tell though how many of the things out there will be monetized.
7. People are looking to raise a lot less money. This trend has been around a while but very few people actually said they were looking for a couple million or more. Actually never heard so many pitches for 100k to 500k deals.
8. Everyone had an iPhone. I've never seen more iPhones at an event than I did this year. Macs galore too. Surpisingly few netbooks though and I didn't see one Droid even though I would of bet I'd see one before the event. .
9. Keynotes and panels were of lesser quality than past years. Networking was much better though. Best LeWeb I've attended so far. (Don't care much for keynotes and panels anyway.) The venue (this year without any heating issues) really is a great space.
10. OK, as always, some fun gripes! Food was worse. Last year, I was shocked at the quality of food available in a very positive way. This year just cheese and coldcuts and some funky finger food? Loic, it's Paris. You're French! This is where you can shine with little effort! Further, I really have to stop working out. Guys, you all know of the urinal stalls in the toilet below the stairs! WTF, I know skinny chic may still be cool in Paris, but in my case "going for distance" is not necessarily a motivating factor when taking a pee! Still had a great time though. Thanks Geraldine and Loic for a fun event.
1. The mood was tired and downtrodden. People weren't necessarily in a bad mood but I've never heard more "I'm tired's" than I did this year.
2. Generally people were upbeat about the start-up industry. 2010 seemed to offer good prospects when listening to people talk about their plans.
3. VC's were most concerned about raising future funds. Almost everyone noted how hard it is or is going to be to get future funds raised. Almost everyone saw the most hurdles for funds focussed on seed and early-stage in general.
4. Business angels are playing ever greater roles in the seed space and more have shown up. At the same time I started hearing a lot more complaining about their terms and behaviour. "Lifestyle angels" were seen as a burden at times.
5. In Germany, Berlin is where it's at. London remains the European hotbed. Heard almost nothing about Southern Europe. The Scandics are coming back.
6. Mobile remains the space where people see the most opportunity. Still hard to tell though how many of the things out there will be monetized.
7. People are looking to raise a lot less money. This trend has been around a while but very few people actually said they were looking for a couple million or more. Actually never heard so many pitches for 100k to 500k deals.
8. Everyone had an iPhone. I've never seen more iPhones at an event than I did this year. Macs galore too. Surpisingly few netbooks though and I didn't see one Droid even though I would of bet I'd see one before the event. .
9. Keynotes and panels were of lesser quality than past years. Networking was much better though. Best LeWeb I've attended so far. (Don't care much for keynotes and panels anyway.) The venue (this year without any heating issues) really is a great space.
10. OK, as always, some fun gripes! Food was worse. Last year, I was shocked at the quality of food available in a very positive way. This year just cheese and coldcuts and some funky finger food? Loic, it's Paris. You're French! This is where you can shine with little effort! Further, I really have to stop working out. Guys, you all know of the urinal stalls in the toilet below the stairs! WTF, I know skinny chic may still be cool in Paris, but in my case "going for distance" is not necessarily a motivating factor when taking a pee! Still had a great time though. Thanks Geraldine and Loic for a fun event.
As Management in a Start-up, It's You Who Has to Decide
This post is very much directed at early stage companies in Germany as this is where I'm seeing it the most. Too many entrepreneurs are scared to take decisions. They are too often looking to their VC's to get consensus. I've seen this case both in portfolio companies where we've already invested as well as from targets we are considering for investment.
As a VC, I want to be able to help you wherever I can. I'm happy to give you advice, offer you my network and give you access to anyone who can help you make a qualified decision. At the same time, I am usually too far away from your day to day business to be making the final call on what you end up doing. If you need to let people go to cut costs, it's your decision. If you need to ramp up marketing to generate more sales, it's your decision. If you need to become more international and address other markets, you decide. I can list 20 other things I've encountered but you get my drift. If you clearly tell me the situation, I'll be happy to give you my opinion. At the same time, I do not have enough intimate details at each of my investments to be the ultimate decision maker. Further, I or other VC's involved may simply be wrong. This is for you to decide and argue or execute on. One way or another we shouldn't have an adversarial relationship. I am more than happy to see you as the leader of your company and the ultimate decision maker if it's in the best interest of the company. That's why we invested.
My urge to write this was actually triggered by two target companies who pitched us recently. Both made it clear that they wanted us involved to help them decide where to go. Generally, this is a good thing. I obviously want to give my input and help a company be as successful as they can be. Yet as soon as I see that management needs me as a crutch I get very worried. Strong management teams lead and get things done. Oftentimes they have to act before getting consensus from everyone. Mistakes will be made and wrong decisions taken. Yet, if you're constantly waiting for everyone to agree and give feedback, you're going to really run the risk of hurting your business.
At this point it's totally cliché to say that the management teams which deliver the greatest success are usually the ones who receive the least hands-on time. Yet over and over again this is the case. It's almost scary to see how often the companies which generate the greatest returns receive absolutely the least amount of the VC's attention. It's the teams who know how to get the advice they need where they can find it and then execute on it. The VC is a partner in growing the business and not an authority who has to be kept happy. Keep this in the back of your mind when running your venture backed business and sometimes ask for forgiveness and not permission if you screw up.