Saturday, February 26, 2011

My response to @bryce crying about @anglelist

http://www.techmeme.com/110226/p10#a110226p10

Whaaaaaaaaa......... Wha............ There are more people fishing in
my pond.... Wahhhhh!!!!! :-)

After reading this I'm left with the following impressions:

1. You're grandstanding
2. You're grandstanding without a salient point
3. You're wildly threatened by the democratization of early stage
investing and you're taking your ball going home to mommy

Are you such a special investor, with such magical dollar bills, that
when things heat up--or have social proof (which I agree is an
annoying term)--that you're investment strategy is to short circuit
and you walk away?

If that is the case I'm worried for your LPs!

When there is heat and competition that is a signal of quality, and
the truth is that money is no longer important.

There is nothing special about having "money" to put into a startup.
Five years ago having money was special, and VCs were important
because of that fact.

Today things like Angel List have boxed out VC--especially small ones
like your firm--to the point at which you are not needed in the food
chain.

Harsh? Yes. True? Hell yes.

Let's be honest and just say what's happening here: you're pissed that
you now have hundreds of angels swarming on deals that you used to be
able to snap up at half the price.

Naval is the ring leader of these annoying, price-insensitive angels
and you're going to make a big statement by opting out.

Excellent! Go home, more deal flow for me!

Angel List and Open Angel Forum are the biggest nightmare small VCs
have ever witnessed--and that's good for startups.

There are now *hundreds* of qualified and unqualified angels who are
driven by sport and not return! They are betting with their own
money--not some LPs--and their more excited by private companies than
4% muni bonds.

The era of the boutique VCs is over. The returns are f@#$%ked for all
time, because angel investors are happy with a 5-10% return YOY
provided they are having fun.

If small VCs post 5-10% returns YOY they are wildly disappointing to
LPs and out of business.

Small VC funds don't provide enough value and are going to be
disinter-mediated in the new world where money is table stakes.

Good luck finding deals off of Angel List, because those deals will be
in companies run by very stupid entrepreneurs. If you're an
entrepreneur you're going to embrace Angel List because that's where
the passionate, low-return driven money is.

Good luck playing with your ball in that backyard with mommy. The rest
of us are going to Naval's playground.

Viva la revolution!

Jason on Twitter Mahalo.com This Week in Startups

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