26. A New Era of Startup Investing | Angel Evolution (Christopher Mirabile)

Due Diligence Podcast DownloadNick Moran Angel List

Christopher Mirabile joins Nick on The Full Ratchet to discuss Angel Investing evolution and changes including:

  • Chris MirabileCan you briefly summarize the traditional Angel Group model from a decade ago and why it worked okay then?
  • You highlight four major themes that have evolved with the modern angel group.  The first is professionalism.  How has dynamic changed in recent years?
  • The next theme has to do with competitive responses.  What is the key message here?
  • What are the Structural and Process Improvements that Angel Groups have made and why?
  • The final theme revolves around environmental changes.  What are the macro drivers that have influenced Angels and Groups?
  • Overall, have angel groups strengthened over the past decade or do you believe that changing times have reduced their importance and/or impact?
  • Can you share your thoughts on the key crowdfunding factors, at present, w/ potential, significant impact that listeners should be aware of?

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Key Takeaways:


1- Old Performance Benchmarks

Having a crisp, efficient and effective process is now just table stakes.  Angels and Groups can no longer differentiate on the traditional elements of professionalism.  Getting strong volume and quality of deal-flow, moving through it quickly, having highly efficient meetings and conducting thorough due diligence are all now expectations, not differentiators.
2- New Sources of Differentiation
Christopher cited five elements that have contributed to the evolution and professionalism of Angel Groups.  Those included:
  • Becoming more returns and reporting-oriented to attract investors to groups
  • More effort into professionalism, focus and training of angels
  • Evolve into life-cycle financiers where more capital is committed and staged over a longer period of a startup’s lifecycle
  • Take on more responsibility in driving performance and, in particular, Exits
  • and finally take a more active role in incubating and accelerating portfolio companies
3- Unprofessional fundraising & investing
You don’t make money in this asset class by being sloppy, cutting corners, moving fast, not doing diligence and overpaying for assets.  You make money by making careful selections, protecting the investment and helping portfolio companies achieve their potential.  And also remember that there are ways within and outside of crowdfunding that can ruin a startup and their cap table.  Chris mentioned that raising money too early, too much and at too high of a valuation has many times led to the death of great startups b/c there’s not enough equity left for a subsequent fundraise to be viable.


Tip of the Week:  Current Drivers in Crowdfunding