Canadian Angels, another oxymoron or not? Recently I came across the
Essex Angel Group, and to my surprise (well not really) they had the
following posted on their site:
We do not make seed investments in startups. We invest in ventures that
have worked out their business model, understand where they’re headed
and are ready to take that next, big step.
Now,
I asked myself, is this the mission of an Angel or a Capital Venture
company? Just yesterday Facebook announced that it was buying Instagram
for, wait for it...$1 Billion dollars. Now that in itself is no longer
unusual for Internet sites, what is unusual however is that Instagram is
a little over 2 years old and to date as yet to make any money! Last
month it raised another 50 million dollars based on a valuation of $500
Million! Go figure!
So, how does a Canadian Angel Company like
Essex Angels deal with that? Now, I am not picking on the Essex Angels
in particular, however, if you are going to say something like "we do
not invest in startups" well you are just asking for it, after all why
be an Angel if you are going to act like the Devil? In fairness to
Instagram, I must say that they have 30 million users, so perhaps, Angel
groups like the Essex one should be careful about what they write. It
seems that Canadian Angel companies see 20 deals, invest in one, and
hope it was the right one. In the US, they look at 20, INVEST in 20 and
hope one makes it. Different philosophy, I wonder who comes out ahead!
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