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Thank you for taking the time to answer my question! The reason I'm asking is that I keep imagining this picture: suppose there are 20 areas of economy(there a

by DenisM 11y ago

Thank you for taking the time to answer my question! The reason I'm asking is that I keep imagining this picture: suppose there are 20 areas of economy(there are more but bear with me), and each angel knows one area well. Startups come at random from all 20 areas, so for 1 in 20 pitches the investor hears about something he understands deeply, can ask good questions and question assumptions. And so he can make an educated decision. What about the other 19? He can't judge the financials because it's too early. He has to rely on various proxies, such as interest from others (not necessarily any more qualified), the quality of the deck, the looks or pedigree of the founders (PhDs and professors are like really sexy as I found out), and so on. The likely rejection reason then comes out arbitrary, and obfuscated. Few people just say "not my area" before you even start. The startup founders are now wasting their time in 95% of the cases, unless they come with a sexy background and then investors are just piling up. Wouldn't that be a lot more efficient if investors just referred unknown companies to a buddy who knows the domain area? I don't see it happening. Am I looking in the wrong place?

jacquesm 11y ago
> Wouldn't that be a lot more efficient if investors just referred unknown companies to a buddy who knows the domain area? That definitely happens. Most angels or VCs have a domain they are interested in and outside of that they will simply not participate or refer. Happened to me less than a week ago so definitely this occurs and fairly frequently. > I don't see it happening. It depends on how close to the fire you're sitting and who you are talking to I guess. In my 'backyard' it happens, frequently and the number of times that a deal is not even looked at is high enough that I never even thought this might somehow be special. Another thing that will happen is that the party that did the referral will still take part in the round but at a much lower level. This is a very fluid world you're trying to capture, local customers, connections and cliques will make up a lot of the background for such deals and you'd have to take all of those into account when you try to factor something like this into your worldview. Personally I'd rather not see angels lose their shirt in areas that are not their domain,better if that money gets spent a bit wiser and on things that they understand.
- DenisM 11y ago
  My hunch is that most angels have random deals come to them, and most of those not being the specialty of this person, get tossed aside. Then there is a group of angels who tag-team, and if one finds a deal he can't grasp, he would redirect to another member of the team. 12 people cold cover an area of expertise that's 12 times larger. At least that's what I think should be happening... Does it?
  - jacquesm 11y ago
    Yes, pretty much. A single angel investing without a network is in dangerous territory, but that's the exception, not the rule. Most angels do have a network, that's also how you find them in the first place.
    - DenisM 11y ago
      Perhaps the world is different, more optimal, in your neck of the woods. We've seen our share of angels coming up with all kinds of reasons to bail out, and never seen one saying "oh jeez, supply chain management is not my thing, let me ask Bob - he likes this stuff". I doubt they all knew the supply chain well enough to judge, but judge they did. I hear what you're saying, it all makes sense. I just don't see it unfolding before my eyes.

by DenisM 11y ago

jacquesm 11y ago

> Wouldn't that be a lot more efficient if investors just referred unknown companies to a buddy who knows the domain area? That definitely happens. Most angels or VCs have a domain they are interested in and outside of that they will simply not participate or refer. Happened to me less than a week ago so definitely this occurs and fairly frequently. > I don't see it happening. It depends on how close to the fire you're sitting and who you are talking to I guess. In my 'backyard' it happens, frequently and the number of times that a deal is not even looked at is high enough that I never even thought this might somehow be special. Another thing that will happen is that the party that did the referral will still take part in the round but at a much lower level. This is a very fluid world you're trying to capture, local customers, connections and cliques will make up a lot of the background for such deals and you'd have to take all of those into account when you try to factor something like this into your worldview. Personally I'd rather not see angels lose their shirt in areas that are not their domain,better if that money gets spent a bit wiser and on things that they understand.

DenisM 11y ago
My hunch is that most angels have random deals come to them, and most of those not being the specialty of this person, get tossed aside. Then there is a group of angels who tag-team, and if one finds a deal he can't grasp, he would redirect to another member of the team. 12 people cold cover an area of expertise that's 12 times larger. At least that's what I think should be happening... Does it?
- jacquesm 11y ago
  Yes, pretty much. A single angel investing without a network is in dangerous territory, but that's the exception, not the rule. Most angels do have a network, that's also how you find them in the first place.
  - DenisM 11y ago
    Perhaps the world is different, more optimal, in your neck of the woods. We've seen our share of angels coming up with all kinds of reasons to bail out, and never seen one saying "oh jeez, supply chain management is not my thing, let me ask Bob - he likes this stuff". I doubt they all knew the supply chain well enough to judge, but judge they did. I hear what you're saying, it all makes sense. I just don't see it unfolding before my eyes.