Angels, Starbucks and Opportunity

February 6th, 2008 · No Comments · Print This Post

The world is on information overload and pumped up for that information with the proliferation of Starbucks and the myriad amounts of energy drinks. Life seems to be all about productivity - cramming in more hours in the day to digest more information to be more productive. Wow, does that sound as bad as it looks? Well, if we look back over the last 50 years we (the USA) have strived to be more productive in all facets of business, manufacturing, logistics, technology, etc. Every time there is a breakthrough it increases the speed of life, from the commercial jet aircraft that allowed us quicker and more efficient global mobility to the computer chip that allowed us to harness massive amounts of number crunching abilities. These are paradigm shifts not only for productivity but also for efficiency. The economy was built on these shifts whether they are monumental or incremental and these shifts are almost always geared toward productivity and greater efficiency. With the history diatribe over, I will get to my point. What is the main driver behind all of this innovation? Capital, or more appropriately, risk capital. Risk capital has come from many different sources such as government initiatives, divisions and/or investment arms of corporations, individual investors, venture capitalists and yes, the angel investors. Angel investors could have easily invested in top tier VC funds or even private equity funds but instead they choose to be more proactive. As mentioned in a previous post there has been a substantive shift, not quite a paradigm shift, in early stage risk capital. These “Angel Groups” have been growing significantly starting from the new Millennia as VC’s continuously move upstream for larger, less risky transactions. The VC’s investment time horizon used to be 7 to 10 years and then look for an exit strategy. That time horizon has been substantially reduced with the current average now 3 to 5 years. Circling back to my opening statements of productivity and efficiency, I believe that Angel Groups will keep growing at a very healthy clip and some of the most innovative companies will be initially spawned by Angel Groups. I will be writing fairly regularly on the angel investing trend and will dig to find some very interesting companies that have already made their mark. In the meantime I am off to get a Venti coffee as I need to stay productive…