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There is a lot of noise in angel investing. Remember, professional investors (like VC firms) have a full time staff handling due diligence, cold pitches etc. A
by louisswiss 8y ago
There is a lot of noise in angel investing.
Remember, professional investors (like VC firms) have a full time staff handling due diligence, cold pitches etc. Angel investors on the other hand simply can't handle that kind of deal flow.
I also know several angels who use the current inefficiencies of the seed stage market as a 'test' for founders. Great founders will find a way to get that warm intro to you - because great founders just get things done.
- shafyy 8y agoI've heard that test argument before, and even larger firms like a16z say that. However, for me, that's more a strawman argument that tries to exploit the market inefficiencies. They already have all the connections and the brand, so making it harder for newer investors to get to quality deals is an advantage for them. What they don't realize is that they are shooting themselves in the foot. They are missing out on new and unknown founders. Is there a reason to assume founder quality is not uniformly distributed? (among founders with and without a network?). Furthermore, I think the test argument is just untrue. There are a lot of people who are good at networking but suck at building a company and do get investments just because of they happen to know X or Y. I know that the realm's currency is the people, and I know that people are super important (like, if you're building a company, it's all about the people), but networking shouldn't be part of this. The networking argument just doesn't make sense from an economic perspective.