Super Angels
With IPO’s nearly shut down, and large Venture Capital firms wringing their hands over “Venture Capital’s Coming Collapse” (a January Forbes cover story), it is encouraging to see a new breed of “Super Angel” courting today’s startups. The June 1 issue of BusinessWeek carried an article (online version here) featuring this new funding phenomenon. Any entrepreneur looking for startup capital should read this article to see if there might be a fit.
Venture capital peaked in 2000 and total VC investment today is below 1998 levels. It has been 11 years since the industry has paid out more cash to investors than it has invested. Many VCs annual rate of return to their investors over this period was lower than the S&P 500 Index.
On the other hand, the Super Angel is smaller, quicker, and more interested in more things than their bigger, older VC brethren. They manage smaller funds and cater to the startup, with smaller investments. They have returned to the grass roots of the VC industry, with informal gatherings at the local pubs and eateries where new entrepreneurs gather to make short pitches to a Super Angel.
However, don’t forget: An entrepreneur needs to do their homework—and well! A short pitch (sans Power Point) requires a person to really know what they are talking about. They must be able to present an entirely new business idea succinctly and completely—in a matter of a few minutes.
Most of the Super Angels are also supplying more than money. One of these is Paul Graham and his new-concept VC firm, “Y Combinator.” Graham launched his firm in 2005 and has funded 145 startups to date.
Y Combinator is a hybrid venture capital firm and business training camp. Although Graham makes small investments (usually less than $25,000), he also provides advice, mentoring, technical help, and introductions to later-stage investors. He also periodically feeds his band of fledgling startup entrepreneurs.
So, the time for you to start a new business could be now…if you are properly prepared. Check out Super Angels on Google—then get yourself ready to pitch your new business. Today might be the day you have been waiting for.
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