Ideas on paper

There’s being a general discussion out there about how the VC industry is changing , enabling the rise of Angels and Super Angels. The financial downturn has definitely forced a change of model. But there are other factors which are modifying the way start-ups are funded, especially in their early stages.

Naval Ravikant (entrepreneur, angel investor and co-author of Venture Hacks) explains this phenomenon very well in the following video.

And here are my notes:

• The rise of Angels is an effect of the rise of power of Entrepreneurs,who have gained enormous amount of leverage due to:

1. -Technology improvements (cloud-computing, social media, blogs, Adwords…).
2. - Companies can be built as they grow.
3. - Incubators have surged and are the new business schools. “Learning by doing”.

• Entrepreneurs are demanding new rights (less control, more specific knowledge, cash upfront,…)
• Lots of successful entrepreneurs are becoming Angels in order to capitalize their money, especially now that real state is not a business.
• Financial effects: rounds are continuous, valuation prices change everyday, no round leads, no board seats.
• VCs bring Money, Advise and Control.
• Angels bring Money, sometimes Advise, no Control.
• “Less meeting, more tweetting”. Broadcast (or multicast) your brand.
• There are companies now who are financing themselves with Angels, from beginning to end.
• Angels investments stay local. You want to know the entrepreneurs.
• The smaller the startup, the smaller the Board should be. Early stage companies should have around 2 people in the Board.

Thanks Naval for sharing your insights!