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The Seed Slowdown

4 December, by Jason Calacanis[ —]

My pal Fred Wilson wrote about the “Seed Slowdown” today. The numbers show two clear trends:

1. 2015 was the peak of angel investing in technology startups in terms of dollars and number of deals.

2. 2017 is crashing in terms of the number of deals closed, with dollar amounts off significantly — but not as much.  

[ Click to Tweet (can edit before sending): https://ctt.ec/CmkbL ]

Fred points out some of the reasons for the boom and bust, and I’m in agreement and expand a bit on what happened — since I lived it and recently wrote about it in my book (angelthebook.com).

There were two major trends contributing to the 2014/2015 boom:  

1. Facebook created a crazy number of new investors (e.g., Dave Morin, TWIST #216 and Chamath Palihapitiya TWIST #238 & #776), who were added to the legions of Google angels running around town (e.g., Andrea Zureck, ANGEL #3).

2. Coordinated seed efforts: These started after Web 2.0 (the 2002-2006 era) and created a professional class of early-stage investors. These efforts include stuff I was working on like TechCrunch50/LAUNCH Festival, Sequoia Scouts & the Open Angel Forum (where Uber Pitched), and notably, Naval’s work on AngelList (TWIST #244) and Paul Graham’s scaling of YCombinator to mind-blowing heights (TWIST #421).

The reason for the decline? I would sum that up in 3 points:

a. Indigestion
When you break into the 30, 40 or 50 angel investments like Matt Brezina (ANGEL #10), Joanne Wilson (TWIST #358 & Fred’s better half) and I have, you need time to digest these deals. As I describe in the book, your startups will start coming back to you 9-12 months after you give them money, and most will not be able to clear market with other investors. This leads to dozens of founders needing your help to raise funds or come to terms with the death of their startups. It’s exhausting, and most angels take breaks investing.

b. Startups Staying Private
By now everyone knows that startups can stay private indefinitely, and this is a bad, bad trend for the entire ecosystem — but more often than not it’s worst for the company, which loses the discipline and the maturation that going public cause. My pal Bill Gurley (TWIST #722), considered by many to be the best VC on the planet right now, outlined this in his infrequently– but poignantly — updated blog, “above the crowd” (he’s tall, he’s a brilliant strategist): http://abovethecrowd.com/2016/04/21/on-the-road-to-recap/  

c. Angels Moving Downstream
Many angel investors learn their craft and get picked up by major firms. Cyan Banister was a frequent guest at the Open Angel Forum, and invested in Uber and Thumbtack at the events. Over the years she became one of the most respected investors in the world and Brian Singerman at Founders Fund recruited her. Joining a big firm is a better life for an angel investor because, well, you do fewer deals at larger dollar amounts. This leads to the opposite of the indigestion in point (a) above! Fewer, more meaningful bets is simply an easier life than being an angel, which at times feels like being a hospice worker — which it obviously isn’t! In fact, that’s a big part of the job of being a great angel investor: explaining to distraught founders that this isn’t life and death.

As Fred points out, being an early-stage investor is hard and some people are leaving to do later stage investing which means…it’s a huge opportunity!

My team and I are doubling down on the early stage with the help of jasonssyndicate.com. Since my book came out, our syndicate grew from 1,100 members to 2,000. It will be 3,000 in the next year I would guess.

This has led to us having a new set of challenges, including our deals closing too quickly and with two out of three interested syndicate members not being able to get an allocation (due to the 99 partner limit of SPVs/LLCs). We are working on solutions to resolve these high-class problems.

At the same time as everyone is leaving, we’re ramping up AND taking steps to make our investments more sound. Those steps are, generally speaking (and we try not to have hard rules):

1. We focus on investing in startups that have product/market fit and some traction. This could be $10,000 to $150,000 a month in revenue, or tens of thousands of daily free users.

2. We focus on founders who are cash efficient. We want founders that get $1 in value from a nickel or a dime, not those who burn a dollar and get a penny in return.

3. We want founders to have 12 to 18 months of projected runway after their fundraising. If you are cash efficient and embrace “low burn culture” you will have time to figure out who your customers are and what they want, while not having to waste time fundraising for a nine to 15 months on average.

4. We try and find teams that have technical co-founders because they tend to be the most cash efficient (point #2) and because they tend to figure out their customers quicker (see point #3!). Startups with technical co-founders also don’t have their products stall in a cash crunch, because the founders can write code themselves.

5. We focus on founders who have reasonable valuation expectations. We don’t do uncapped notes, and we will negotiate valuations fairly.

6. We focus on founders who want to have proper governance at their startups. This includes doing monthly updates, having information rights and starting board meetings sooner than their peers. We want founders who want to put on the “big boy/big girl pants,” as my pal Chamath says.

7. We obtain and protect our rights in future rounds of financing. We insist on a board seat option if we own over 5% of a company, and we take that board seat if the company gets their Series A. We have pro-rata rights and when a Series A or B happens, we follow on. This is one of the delightful aspects of our syndicate being oversubscribed.

Open For Business

Bottom line, we’re open for business and we’re going to do 40+ deals a year in 2018. If you want to “do the work” as my TWST coffee cups encourage, as a founder looking for funding or an angel investor looking to lead the industry, visit jasonssyndicate.com.

I am writing a follow-up piece for founders titled: “Surviving the Seed Slowdown” on my email list. Sign up in the sidebar at Calacanis.com.

Best, @jason Calacanis

PS – Read the book and let me know what you think — please! Angelthebook.com.

PPS – If you read the book, please consider a review:  

https://bit.ly/5starangel

https://www.angelthebook.com/audible

https://www.angelthebook.com/goodreads

PPPS – Angel University will be taking place two times in 2018. At it, 50 angels learn from each other and collaborate. Sign up at Angel.University.  

PPPPS – Angel Summit will take place for the third time in Napa in July of 2018. At this 2.5 day event we do business in the AM, activities in the afternoon and play cards, video and board games at night. Launchangelsummit.com

PPPPPS – We just finished Season One of ANGEL, the podcast. Our ten guests:

1. Cyan Banister, Founders Fund

2. Gil Penchina, angel investor & syndicate lead

3. Andrea Zurek, XG Ventures

4. Ed Roman, angel investor & syndicate lead

5. Zach Coelius,  angel investor & syndicate lead

6. Ben Narasin, previously Canvas (now NEA)

7. Dave Samuel, Freestyle Capital

8. Pejman Nozad, Pear.vc

9. “Ask an Angel”

10. Matt Brezina, angel investor


ANGEL media hits so far… thank you.

12 September, by Jason Calacanis[ —]

Wanted to say thank you to everyone who has had me on their podcast/networks/etc. to discuss my new book ANGEL.

Podcast/Radio: Guest Appearances on Angel
2CentDad: Interview by Mike Sudyk
Bloomberg Markets: Interview by Carol Massar and Cory Johnson
Educate Yourself: Interview by Ryan Carson
Forbes: Interview by Steven Bertoni
The Full Ratchet: Interview by Nick Moran
Inside Outside Innovation: Interview by Brian Ardinger and Josh Berry
Intercom: Interview by Des Traynor
The James Altucher Show: Interview by James Altucher
KindredCast: Interview by Alex Michael
The Learning Leader: Interview by Ryan Hawk
The Matt Report: Interview by Matt Medieros
The Meb Faber Show: Interview by Meb Faber
Mixergy: Interview by Andrew Werner
Success! How I Did It: Interview by Alyson Shontell
The Twenty Minute VC: Interview by Harry Stebbings

Media Hits

7/18/17: Cheddar TV (1 hour 35 min)
7/19/17: CNBC Squawk Alley
7/23/17: Salon
7/25/17: Bold TV
7/26/17: Fort Knoxx
8/25/17: Live Talks LA

If you would like to have me on your podcast to talk about the book, tech, angel investing and life, email me [ jason at calacanis.com ]


Should everyone be an angel investor? + some upcoming events

11 August, by Jason Calacanis[ —]

The biggest question I was asked about angel investing during my New York book tour was, “Can anyone be an angel investor?”

Today I want to try and answer that question and let you know about some upcoming events.

[ Click to Tweet (can edit before sending): http://ctt.ec/6sNj5 ]

First, some upcoming events:

This Tuesday, August 15th, I will be in Los Angeles speaking at Google in Venice (Google employees only) from 11:30AM-1:00PM.

Tuesday night, August 15th, I will be speaking at a public event, “Live Talks Los Angeles: An Evening with Jason Calacanis” at 8:00PM, which you can register for here: http://bit.ly/eveningjcal

I’ll be going to Stockholm, New York and Los Angeles in the fall. Frequently updated schedule here: angelthebook.com/tour

Second, “Can/Should everyone angel invest?”

I wrote the book “Angel” in order to detail the risks involved in angel investing, and share strategies that might increase your odds at having a positive outcome if you choose to become an angel.

[ ANGEL book reviews: http://bit.ly/5starangel ]

There is one important rub, however, here in the United States: traditionally private companies only accept investment from “accredited investors.”

Accredited investors are basically rich people, who have a lot of money in the bank or have large, well-documented salaries. Non-accredited investors are the other ~95% of Americans (of which I was one for 75% of my life).

You can read more about this at the SEC’s website here: http://bit.ly/secinvestor

However, last year the SEC introduced a new class of investment commonly called “equity crowdfunding.” This is a way for non-accredited investors to invest in private companies. It’s a bit complicated, and it’s only a year old, but I think it’s a very positive development.

My belief is that all Americans should be able to invest their money in startups, in the same way all Americans can buy stocks, play the lottery, start small businesses, start a well-balanced portfolio at Wealthfront, or even go to Las Vegas to play poker, roulette or place a bet on a football game.   

In that spirit of experimentation and investment in new ideas, we are partnering once again with SeedInvest, a platform that matches startups with investors — both accredited and nonaccredited, to find great startups and help them raise capital live on stage at our events.

We did live equity crowdfunding on stage at the LAUNCH Festival in April and the participating startups raised $7.5 million from 3,900 investors on SeedInvest.

Two companies had notable raises: HelloMD and Kylie.AI. HelloMD raised over $3 million, with investment sizes between $500 to $1 million. In fact, SeedInvest reported to us that HelloMD was oversubscribed by $700,000.

Kylie.AI’s raised $1.5 million and was also oversubscribed. SeedInvest has informed us that they received 110 investments ranging from $500 to $350,000.

We are going to do live equity crowdfunding with SeedInvest again in two months — and we’re looking for startups to participate.  

The Important Details

LAUNCH SCALE is October 17-18, and we have an all-star line up of speakers including Chamath Palihapitiya (Social Capital), Josh Elman (Greylock), Kathryn Minshew (The Muse), Jason Lemkin (SaaStr), Monique Woodard (500 Startups), Loic LeMeur (Leade.rs), Tomasz Tunguz (Redpoint Ventures) & many more. http://launchscale.net

In addition, five startups will get the opportunity to present on-stage and receive product feedback and fundraising advice from a panel of investors. These five startups will be chosen by me from 10 companies that participate in equity crowdfunding on SeedInvest.

To apply for equity crowdfunding and the chance to pitch onstage visit: https://launchxseedinvest.splashthat.com/

If you’d like to learn more about the SeedInvest platform, you can check out their overview presentation: https://docsend.com/view/zv38y6b

Any other questions email the SeedInvest Venture Team at: venture@seedinvest.com

Angel investing is hard, rewarding and complicated. If you’re thinking of doing it please a) read my book ( http://bit.ly/5starangel ), b) only invest money you can afford to lose, c) take your time, making small bets for the first year or two while you learn.

What excites me about equity crowdfunding is that people can typically make very small bets (say $500), while they learn about what I’ve found to be the highest risk and most interesting asset class on the planet: startups.

Did I mention I read the audiobook myself?   http://adbl.co/2vMZGNc

Best, @jason

PS – We are taking LAUNCH Festival to Sydney in 2018 & 2019. If you want to join us, and maybe even dive the Great Barrier Reef, join this Facebook group: https://www.facebook.com/groups/launchsydney


ANGEL the Book Tour

4 August, by Jason Calacanis[ —]

Friends,

My book “Angel: How to Invest in Technology Startups” is out and I can’t wait to hear what you think about it. You can order ANGEL here, and if you like it, please write a nice review on Amazon!

The book tour is in full swing, below are past & upcoming events. If you’re interested in hosting a book signing or meet-up, more info is here. Hope to see you on the road.

best,
@jason

[ Click to Tweet (can edit before sending: http://ctt.ec/y4vkf ]

Upcoming Events
(updated frequently here)

Tuesday, August 15, 2017

Google Talk LA: 11:30AM-1:00 PM
Private Event

Live Talks LA: An Evening with Jason Calacanis: 8:00PM
Purchase Tickets Here

Monday, September 4 – Friday, September 8, 2017

Stockholm and Norway – Event details coming soon!

Monday, September 25, 2017

Speaker and Book Signing at TechStyle: 11:45AM-1:30PM
800 Apollo Street, El Segundo, CA

Fireside Chat, Q&A, Book Signing at Mind & Mill in Riverside, CA: 5:30-8:30 PM
Details Here

Previous Events

Thursday, July 27, 2017

Seed Invest – Fireside Chat: Jason and Ryan Feit at Silicon Valley Bank, NY: 12:30 PM

Seed Invest – Q&A and Book Signing at Silicon Valley Bank, NY: 3:00 PM

Wednesday, July 26, 2017

Dim Sum with Jason at The Golden Unicorn, NY: 6:30 PM and 8:30 PM

Tuesday, July 25, 2017

Fireside chat: Jason and David Sorin at Montclair University, NJ: 6:00-9:00 PM

Monday, July 24, 2017

Book Signing at Barnes and Noble Tribeca, NY: 6:00-8:00 PM

Wednesday, July 19, 2017

Fireside chat: Jason and James Altucher at Squarespace HQ, NY: 6:00-9:00 PM

Tuesday, July 18, 2017

Harvard Business School Event, NY: In Conversation w/ Jason and John Reese: 6:00-8:30 PM

Wednesday, June 28, 2017

Bloomberg Beta Future Founders: Fireside Chat: Jason and James Cham: 6:00-8:00 PM

Tuesday, June 27, 2017

Fireside Chat: Jason and Michael Todasco at Paypal: 1:00-2:00 PM

Fireside Chat: Jason and Asra Nadeem at Draper University: 6:00-9:00 PM

Monday, June 20, 2017

Keynote Speaker at San Diego Startup Week with special guest James Heller (Wrapify): 7:30-10:30 PM

 


I wrote a book

29 June, by Jason Calacanis[ —]

Friends,

I wrote a book about angel investing, starting companies and the future.

It’s called ANGEL and it’s coming out July 18th.

[ Click to Tweet (can edit before sending): http://ctt.ec/N6o9W ]

They offered me a ghost writer, but I decided to write it myself. It took 19 long days, but I think it came out great. If you’re a founder, investor or in any way involved in technology you’re going to get a lot out of it.

If you’re not in the industry, but you’re interested in breaking in and understanding how it works, well, ANGEL is a candid look at how it works and how you can break in.

I wrote the book because I believe that the best way to generate outsized results is to own stock in high-growth, private, early-stage technology companies.

If you’ve ever come to one of my events, or appreciate the podcast or my writing, a great way to show your support is to spend $10-20 bucks on the audio book (I read it), the hardcover or the ebook. If you’re a super fan, buy all three or give them as a gift.

After you read it, please consider writing a review — if you loved it!

Barnes and Noble:
goo.gl/ZUw9k2

Amazon:
http://amzn.to/2sSyyKi

Audible:
http://amzn.to/2sAfEpv

iBooks:
https://itunes.apple.com/us/book/angel/id1166101041

All the best, @jason calacanis

PS – If you want to angel invest alongside me, or see my deal memos, sign up for http://jasonssyndicate.com











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