At a recent meeting of angel investors in Atlanta, when angels were asked to raise their hands if they had done a deal this year — no hands were raised. Even The Godfather hasn’t funded a new company this year. There is a sense among entrepreneurs in this city that many of our angels are no longer real investors, that they’ve been taken to the cleaners by the downturn and stand around at fund-raising events for free drinks and notoriety — not to do deals. With 8 important exceptions, very little money is flowing to early stage technology entrepreneurs in Atlanta right now. This downturn is a global phenomenon and deal flow everywhere has been impacted, even in Silicon Valley.
Which brings us to Ron Conway, “Mister Silicon Valley.” Ron Conway is an angel investor who has done several hundred deals so far and is one of the Valley’s strongest proponents (note, this video also includes Mike Maples, Jr. whose interview will appear here soon). Ron warned his portfolio companies about the downturn in an October, 2008 email. And yet, despite the downturn, according to a TechCrunch post, Ron recently announced he will be making 40-50 new investments in real-time Internet companies (think Twitter and other models focusing on time versus relevance) in the next 18 months.
It was with all this in mind that I sat down with David Lee of Ron Conway’s firm, SV Angel, LLC. David talked about the firm’s investment strategy, the nature of angel investing, picking a winning company, and the Valley advantage. David explained why Valley investors prefer to invest locally due to the “high touch” nature of angel investing, described what a good team looks like, and discussed how successful companies pivot and iterate their products over time before achieving success. Of particular interest was David’s explanation of SV Angel’s methodology for evaluating financial models as it contrasts with some other methodologies. Of note to entrepreneurs: SV Angel reads every executive summary submitted to them, but a personal introduction goes a long way.
David concludes by saying if you have a big idea, you should move to Silicon Valley, and he explains why. Although this isn’t the advice I was looking for, I do think it is important to understand just what kind of environment the ‘California game plan’ comes from and I think David’s advice is illustrative in that regard.
(This post is part of a series of posts by TechDrawl Contributing Editor Russell Jurney on the startup culture in Silicon Valley. The first post was the idea for the study, the second was fundraising for the trip, the third was Jurney’s personal story from 35k feet, the fourth was about the California state of mind, the fifth the scintillating interview with Konstantin Othmer. Stay tuned for more video interviews from Jurney).
(A nostalgic photo of Ben Dyer and Ron Conway 30 years ago from Celia Dyer, and 2 recent ones:)
Ben Dyer and Ron Conway Circa 1979
Ron Conway in 2007
Ben Dyer in 2007
[Photo Credit for Ron Conway 2007 : Joi on Flickr]
* The term Spreadsheet Jockey is a creation of one Sanjay Parekh, used here without permission.
