My friend Fred wrote a great post this morning about the confusing title on Claire Cain Miller’s NYT article about venture returns.
I reblogged my favorte line from the post earlier today. But you should read the whole thing. It gives the full story.
Claire and Brad Stone have another article in todays NYT – “Angels Flee From Tech Startups”. This is how the article opens:
“Angel investors are the optimistic financiers who give entrepreneurs their crucial first infusion of cash to bring their ideas to life. Now, in the midst of a punishing economic downturn that is sparing few companies, these patrons are cutting back on their bets and threatening the very foundation of the technology economy.”
Yes, it’s true. This recession is causing everyone to rexamine their financial situation. That’s true for all investors.
And yes, many angels are jumping ship. In many cases good young entrepreneurs will find it harder to start their company. But I don’t think angel investors are the only ones providing entrepreneurs with their first infusion of capital. Plenty of founders are bootstrapping or getting seed financing from VCs to kick start their ideas.
I think Roger Ehrenberg, who is an active angel tech investor in NYC, said it best in his tweet:
“Really? Money isn’t being tossed around, but the good deals are getting done.”
Roger is absolutely right. There are still great active angel investors. I’m also seeing those solid angels doing follow on investing as well with their best companies. I’m in the midst of two such examples right now.
In addition to the best angels remaining active, there are other sources of capital including TechStars, Y Combinator, Baseline, Betaworks and others.
Here’s the other thing. In light of all these changes, we are definately going to see some VCs get even more aggressive in the super early stage buisiness. And thats a good thing.