The rise of the angels

The Rise of the Angels Naval Ravikant AngelList ✌ angel.co

“All great truths begin as blasphemies” - G.B. Shaw

The Venture Industry has already changed

The Rise of the Angels Entrepreneurs

Entrepreneurs gain Leverage • Cheaper • Incremental • Incubators / Combinators • More hit-driven • Transparency • Mostly Seed and Consumer

A Bill of Rights 1. Quick decisions 6. No Control 2. Standardized Docs 7. Right to Sell 3. Allocate the round 8. Peer Relationships 4. Independent decisions 9. Speciﬁc Knowledge 5. Raise less; dilute less 10.Cash up Front

Venture capital is a business and is open to attack by “startups” with disruptive new business models and technologies

Why Now? • NASDAQ rebounded; but other asset classes have a poor outlook • Small exits are creating small angels • Consumerization of everything • Small M&A market still strong • Incubators, AngelConf, AngelList

The New Financings • Product built at the incubator level • Continuous, not discrete rounds • No ﬁxed amounts, no closings, no leads • Prices beginning to ﬂoat • No Board seats (no leads) • Standardized terms • Herd mentality (rational); oversubscriptions • Unbundling of advice, control, money

“By its nature, the Internet undermined anyone whose status depended on a privileged access to information” - Michael Lewis

Wait and See? • Could just wait for the Series B • 10 startups that matter • The ones with traction are obvious • Used to be about capital, judgement, dealﬂow • Now about access • “Stay hungry, stay foolish”

Moving Upstream • Being an angel is about control, not $ • Hustle; seed programs • Clear differentiation; specialize • Give up need for control • Productize yourself • Less meeting; more tweeting • Retreat to higher ground

Learning to Fly • Be picky • Join the herd • Brand yourself • Be humble • Stick to standard terms • Shun power • Buy (not earn) your stock

“But I don't want to go among mad people,” Alice remarked. “Oh, you can't help that,' said the Cat: “we're all mad here. I'm mad. You're mad.” - Alice in Wonderland

• Un-priced Rounds • No vesting (bad for entrepreneurs too) • Acquirers split founders / investors • Some angels - full anti-dilution, control, tranches • Doubling prices in a month • Selling common stock to minority shareholders

“Trust in Allah - but tie your camel” - Arabic Proverb

Predictions • More angels on their way • Spectacular fraud will occur • Entrepreneurs will exploit investors • Some companies will skip VC altogether • Super-angel bubble? Unknown

“There's a battle outside ragin'. It'll soon shake your windows And rattle your walls For the times they are a-changin'.” - Bob Dylan

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The rise of the angels

by Venture Hacks

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