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Charlie Paparelli - Angel Investments in the Downturn
by Decius at 4:17 pm EDT, Oct 8, 2008 |
We conducted a soft survey at last week's Atlanta Angel Lounge meeting. As you review the results, you should keep in mind that this crisis is new and unsettled. In fact, since our last meeting the Dow Jones Industrial average dropped over 1,400 points. So this data, although only a week old, may be outdated. Here is what we learned from a gathering of 25 Atlanta angel investors: * The professional angels with a sizable wealth base said, 'it will be business as usual.'
* There was agreement that with AAA rated companies like GE paying 10% with warrants for long-term money, valuations for early stage companies will be lower. The risk/return ratio is shifting with the market.
* Many angels are sitting on the sidelines waiting to see what their liquidity will be when the markets get back to some rhythm, good or bad.
* Deals will be more closely scrutinized and therefore more time will be needed to raise money.
I've been worried about this. It appears the crisis will impact startups negatively, but it doesn't sound like the market has been wiped out... yet... |
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RE: Charlie Paparelli - Angel Investments in the Downturn
by flynn23 at 11:11 am EDT, Oct 9, 2008 |
Decius wrote: We conducted a soft survey at last week's Atlanta Angel Lounge meeting. As you review the results, you should keep in mind that this crisis is new and unsettled. In fact, since our last meeting the Dow Jones Industrial average dropped over 1,400 points. So this data, although only a week old, may be outdated. Here is what we learned from a gathering of 25 Atlanta angel investors: * The professional angels with a sizable wealth base said, 'it will be business as usual.'
* There was agreement that with AAA rated companies like GE paying 10% with warrants for long-term money, valuations for early stage companies will be lower. The risk/return ratio is shifting with the market.
* Many angels are sitting on the sidelines waiting to see what their liquidity will be when the markets get back to some rhythm, good or bad.
* Deals will be more closely scrutinized and therefore more time will be needed to raise money.
I've been worried about this. It appears the crisis will impact startups negatively, but it doesn't sound like the market has been wiped out... yet...
It only affects valuations of startups negatively. It means that valuations, just like valuations of public companies, have gone down. It means that fundamentals like revenue and profitability will be much much more important. But these are not really new trends. The days of true "early stage" funding, that is the funding of concepts or teams without real customers, revenues, or earnings, have been over for quite some time. |
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Charlie Paparelli - Angel Investments in the Downturn
by Lost at 2:15 pm EDT, Oct 8, 2008 |
We conducted a soft survey at last week's Atlanta Angel Lounge meeting. As you review the results, you should keep in mind that this crisis is new and unsettled. In fact, since our last meeting the Dow Jones Industrial average dropped over 1,400 points. So this data, although only a week old, may be outdated. Here is what we learned from a gathering of 25 Atlanta angel investors: * The professional angels with a sizable wealth base said, 'it will be business as usual.'
* There was agreement that with AAA rated companies like GE paying 10% with warrants for long-term money, valuations for early stage companies will be lower. The risk/return ratio is shifting with the market.
* Many angels are sitting on the sidelines waiting to see what their liquidity will be when the markets get back to some rhythm, good or bad.
* Deals will be more closely scrutinized and therefore more time will be needed to raise money.
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