I just got back from the Techstars Boston demo night. Last night I went to Angel Boot Camp. I live outside of Philly, but made the trek up to Boston for both events. Here's what I learned.
- Lots of companies won't need VC. Chris Dixon recently wrote about how old VC firms should get ready to get disrupted. That was painfully obvious at both these events.
At Techstars, every single company was raising a small angel round. Not one company pitched for a Series A and yet a decent portion of the room seemed like VCs. This could have been due to a lot of reasons (advice, selection by TS, etc.), but bottom-line everyone felt it was in the interest of the companies to pitch this way.
Technology and customer acquisition are now cheap. $200K can get you a lot of validation. But interestingly, because validation is cheap, if it works, the companies may not need to raise more because they'll be instantly profitable. And if they do need to raise more, the valuations will be good.
I felt validated in my strategy to look for companies that, if everything goes as planned, may not need VC money at all.
- I need to do more deals. I was already planning on doing more deals, but this need was reinforced. There are two main reasons. First, the simulations show you need to do about twenty deals to guarantee some return given a reasonable distribution of hits. Second, deals create deal flow, and deal flow creates returns. By doing deals your network grows, and in turn, your deal flow.
- I should invest in hackers. I'm a hacker and I believe I understand the hacker mentality pretty well. I want to invest in people I trust, understand, and most importantly that I personally want to spend a lot of time working with. Basically, I want to invest in people like me :). It's become clear that doing so will both increase returns and increase satisfaction in my angel investing.
- I need to get plugged in more to the community. I suck at "networking." Like most people, I'm known in some circles, and completely unknown in others. I'd like to be more known in the angel investing community, and should find ways to make that happen.
- Philly needs work. Boston kept comparing itself to Silicon Valley. Philly is well behind Boston. It's clear that some local super angels would help. Boston seems to have a few.
Thank you to Roy Rodenstein for pushing me over the edge to come up to Boston and attend these events.