4 ms·

I'm not losing sleep over it (too busy hacking), but it's easy for We Pay to say they don't care: they've already raised 3 rounds http://www.crunchbase.com/comp

by waxman 16y ago

I'm not losing sleep over it (too busy hacking), but it's easy for We Pay to say they don't care: they've already raised 3 rounds http://www.crunchbase.com/company/wepay http://www.crunchbase.com/company/wepay . The essay was edited by PG, himself. Clearly the angels have treated them well. I think the more pertinent conversation should be around what the hell do some of these angels offer to entrepreneurs, anyways? Money is a commodity these days. Plus, real hackers require very little, if any, to get off the ground in the EC2-era. The very top guys (like PG, Sacca, Ron Conway, Chris Dixon, etc.) are obviously in it for the right reasons AND offer a lot more than money. But the majority of angels, even some of the top ones, I fear take more than they give.

edanm 16y ago
"What the hell do some of these angels offer to entrepreneurs, anyways? Money is a commodity these days." As a founder, I'll take a stab at that. I haven't been to YC or raised money, but from my perspective, here's why I would: 1. They offer advice. For a first-time entrepreneur, this is probably enough reason to work with angels right there. 2. They offer networking. Good angels are supposed to know everybody, including just the right people you should be talking to to take your company to the next stage. 3. Money is important. I happen to have savings, but if I were trying to start without already having money in the bank, I'd have to go get an angel round. And people straight out of University don't have money.
- waxman 16y ago
  Fair points. Having raised money from angels before, here are some of my thoughts: 1. Advice: This is clearly extremely valuable, even for experienced entrepreneurs. That's probably why a company like Chartbeat (serious revenue, and part of Betaworks) raised a $3 million round from strategic angels, when they probably didn't need the money http://techcrunch.com/2010/08/31/chartbeat-3-million/ http://techcrunch.com/2010/08/31/chartbeat-3-million/ . That said, if you're taking on angels for non-monetary reasons, then you still have to think about their value-add in monetary terms (at least, generally). Is this person's advice worth 10% of my company? Also, you could get their advice by asking them to sit on a board of advisors (or directors) for a token sum of equity (<1%) and still get them involved and incentivized without forking over a large chunk of ownership. 2. Networking: This is certainly a huge contribution of the top angels (and frankly, it's probably, more than any other single factor, what separates the Conways/PG's/Dixons of the world from every one else). Again, though, you can potentially gain access to the same networks through less "expensive" means: i.e. connecting with these people in some other way, whether as a friend, or a mentor, or an advisor, etc., but not necessarily as a full-fledged investor. If their network really IS that valuable, though, surrendering a large chunk of equity might absolutely be worth it, provided that they are excited about your start-up. (EDIT: I'm not recommending you "hack networking" in an unethical way. If somebody is providing you value through their network you should certainly reward them for it. At the same time, you shouldn't just surrender a quarter of your company because some says they have a lot of contacts). 3) Money: Agreed. Money makes the world go round. Most hacker/founders, though, only need to cover their living expenses to get projects off the ground. $70k/year for two boot-strapping founders is very different than a million-dollar angel round. Also, people billed as "top-tier" angels are obviously commanding a premium for their investment (a higher % of the company for less money). Just make sure you're getting your money's worth. I think in certain cases angels are definitely worth it, but I think it's essential to weigh the costs of equity with what they're actually giving you.

by waxman 16y ago

edanm 16y ago

"What the hell do some of these angels offer to entrepreneurs, anyways? Money is a commodity these days." As a founder, I'll take a stab at that. I haven't been to YC or raised money, but from my perspective, here's why I would: 1. They offer advice. For a first-time entrepreneur, this is probably enough reason to work with angels right there. 2. They offer networking. Good angels are supposed to know everybody, including just the right people you should be talking to to take your company to the next stage. 3. Money is important. I happen to have savings, but if I were trying to start without already having money in the bank, I'd have to go get an angel round. And people straight out of University don't have money.

waxman 16y ago
Fair points. Having raised money from angels before, here are some of my thoughts: 1. Advice: This is clearly extremely valuable, even for experienced entrepreneurs. That's probably why a company like Chartbeat (serious revenue, and part of Betaworks) raised a $3 million round from strategic angels, when they probably didn't need the money http://techcrunch.com/2010/08/31/chartbeat-3-million/ http://techcrunch.com/2010/08/31/chartbeat-3-million/ . That said, if you're taking on angels for non-monetary reasons, then you still have to think about their value-add in monetary terms (at least, generally). Is this person's advice worth 10% of my company? Also, you could get their advice by asking them to sit on a board of advisors (or directors) for a token sum of equity (<1%) and still get them involved and incentivized without forking over a large chunk of ownership. 2. Networking: This is certainly a huge contribution of the top angels (and frankly, it's probably, more than any other single factor, what separates the Conways/PG's/Dixons of the world from every one else). Again, though, you can potentially gain access to the same networks through less "expensive" means: i.e. connecting with these people in some other way, whether as a friend, or a mentor, or an advisor, etc., but not necessarily as a full-fledged investor. If their network really IS that valuable, though, surrendering a large chunk of equity might absolutely be worth it, provided that they are excited about your start-up. (EDIT: I'm not recommending you "hack networking" in an unethical way. If somebody is providing you value through their network you should certainly reward them for it. At the same time, you shouldn't just surrender a quarter of your company because some says they have a lot of contacts). 3) Money: Agreed. Money makes the world go round. Most hacker/founders, though, only need to cover their living expenses to get projects off the ground. $70k/year for two boot-strapping founders is very different than a million-dollar angel round. Also, people billed as "top-tier" angels are obviously commanding a premium for their investment (a higher % of the company for less money). Just make sure you're getting your money's worth. I think in certain cases angels are definitely worth it, but I think it's essential to weigh the costs of equity with what they're actually giving you.