Dear Friends,
It's no shocker that the past 12 months have led to a lot of changes in the angel and venture capital communities. Some are positive; some are just coping. I recently did an interview with Mass High Tech to discuss the future of angel investing and what the hot areas for entrepreneurs would be in the near future. Click here to read the rest and see what other areas are promising (and where I'm pessimisstic).
One thing, particularly in volatile times, we need to think about is, What do we mean by "the angel community?" I think we really need to break it into two big groups, there are individuals and there are groups, and they act differently. What makes them all angels is that they are investing their own money.
There are certain groups like CommonAngels who seized the bull by the horns. In Q4 '08 we spent months in strategy and planning discussions. They were not easy. They were not pleasant. It was hard work, but we came out at the end of December with very strong consensus on what we wanted to do, which was, 'It's a good time to be investing,' but the thing we could not tolerate was capital risk. Now the buzzword in the venture community is "capital efficiency." For us, that means go-to-market (funding) is right around $2 million, and maybe up to $4 million to get to cash-flow break-even and that's got to be it.
What are the hot areas? Among them, I am definitely seeing Internet-enabled business - some people say Web 2.0, some people say social media, but I think that is too restrictive - and mobile as incredibly intense and exciting areas, partially for cost reasons, but partially because the innovation's opened up on both of them, mobile especially. The walled gardens of the carriers came crumbling down a couple of years ago and not a lot of people noticed. Now with a diversity of handsets and you have lot of extremely powerful and new computing platforms. Go to Mobile Monday: You can't have a dull environment when you have 300 to 500 people who just show up.
--James Geshwiler
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- Best, Tan Yinglan
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