Strange times

The financial markets are very unsettled these days. Many people have lost significant value from their investments and the forecast is for more turbulence. Angel investors and VCs have no way to liquidate their portfolio investments to free up cash for the foreseeable future.

Industry pundits are predicting that this will make it very hard for new startups to raise capital. On the surface, this looks true and therefore bad news for us. However, I attended the Vantec Angels Network regular monthly meeting yesterday. Three companies were pitching a long (20 minute) sponsored pitch and six more did a five minute pitch. The companies presenting weren’t rock stars by any stretch of the imagination but the room was full of angel investors to the point that it was standing room only. According to Basil Peters, one of the principals in the group, this has only happened a couple of times in the group’s multi-year history.

Talking with angel investors in the room,  it became clear that they held two themes in common. The first was that they were feeling pressure on their “regular” investments and were looking to their angel investments (where they felt they had more control) to pick up the slack. Said another way, the broader markets sucked and they were looking for a better place to put their money. Second, they felt that the downturn in the market would force entrepreneurs into more realistic valuations and therefore give them a chance to pick up some bargains. In other words, they were shopping.

My take away from all of this is that a quality team with a quality business idea building a quality company will still be able to raise the money it needs. We are that company.

Time will tell if my theory is correct…

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