Angels flee from startup investments

<i>"It’s getting tougher for companies to raise money, but I think the good ones are still getting it done," said Ron Conway.</i><p>I think that's key... certainly, some opportunities that were worth a shot when everyone was flush with cash are now untouchable, but angels, like all other wealthy individuals, are still looking for good business opportunities. Convincing them might be a bit harder and require a somewhat more "this start-up will make money, here's how" approach, but it should still work.

If you can demonstrate a well-considered revenue model (i.e. cash, not eyeballs), there is still plenty of money going around. We raised a seed round in October, and it was actually much easier than all the doom and gloom you read about angel money drying up. I think the key was ensuring there is real, hard cashflow opportunities.

"For TwoSmartDogs, an Internet start-up in Los Angeles that was building an online hub for adult education classes, this sudden pullback was disastrous.<p>"In 2007, the company raised $715,000 in its first round of angel financing from eight investors. When the founders approached current and new investors for more capital in September, they were met with silence."<p>Why did investors think this<p><a href="http://www.twosmartdogs.com/" rel="nofollow">http://www.twosmartdogs.com/</a><p>was a good business opportunity in the first place?

Most angels are such a bunch of pompous amateurs. If I was put in a position where I was broke and had to raise a small amount of money to start my bold new venture, I would get a minimum wage job and burn through my nights and weekends. The agony of the minimum wage job would give me real impetus to make the business work, and it would be far less ridiculous than constantly explaining business decisions to some guy who sold a company for $10m (or worse, inherited money) and now considers himself a "player."<p>Don't get me wrong, there are some wonderful angels out there -- for example, accomplished university professors (a secretly wonderful reason to go to college, even if you are career-obsessed and don't care for a liberal arts education or hooking up with confused 19 year olds), or successful veterans of the field in which you are operating (such as Aydin Senkut, referenced in that article, or our good friend pg) -- but on the whole, the "angel investor" industry is a total waste of time, and a total distraction.<p>Also, from what I hear from VC friends, some angels can make your Series A a real pain; they don't pay to play, and they get antsy about dilution. I'm sure pg would have more insight on this matter than I.

Fine, if you have the choice.