Archive for June, 2010
Exit Junkies: When Equity Stifles Innovation
Startups and venture investors share a problem; “exit dependence.” Equity investors can’t sustainably invest in startups without exits, because exits are how those investors get paid. They must be able to sell their equity (i.e. stock) at a higher value through a merger/acquisition or IPO. No exit, no returns. There must be a “liquidation event.” Startup funding is hooked on exits.
The Funding Black Hole: A Call for Innovation
There is a funding black hole. It sucks in and destroys the gross majority of startups worldwide. It may have even frustrated more innovation, economic development and human progress than all of history’s wars, diseases and natural disasters combined. This “black hole” is the global gap in startup funding. More
3 Top Trends in Angel Investing
1. Industry as a whole: Despite a global recession the average amount that Angel groups invested in startups in 2008 was nearly identical to the level in 2006 (however 2008 witnessed an 8% drop from 2007). Meanwhile average dollars invested per funding round grew by 14% over the same period. Overall, 2008 US Angel investment represented an estimated $19 billion in 55,000 deals.[i]
Bottom line – Total Angel investment was flat between 2006 – 2008, but the average funding round grew by 14%. Angels began doing fewer, larger deals. More