A fantastic October 2010 survey of 363 emerging technology company CEOs by the law firm Dorsey and Whitney is a fantastic snapshot of how the “old Silicon Valley boys club” world is gone forever. Highlights:
The Super Angel Funds Are Coming. While individual angel investors still account for the largest percentage of funding for startup entrepreneurs, the new portfolio-based funding models – either in the form of incubators like Y Combinator and Techstars or in the form of Super Angel funds like Right Side Capital, SoftTech, and Floodgate are coming fast.
Close to 50% of the CEOs surveyed expected to get funding from portfolio angels in the next 12 month, up from less than 20% this year.
Sequoia, Kleiner, et al – Your Best Days are Behind You. Quoting the report, “The perception of the investor’s brand no longer appears to carry the same prestige and value, with slightly more than 75% surveyed thinking that a tier-one “brand name” VC was only “somewhat important” to “not important.”
Speed, in the Internet Age, is EVERYTHING. Fully 92% of the CEO respondents expressed frustration with the slowness of the funding process. In a word where one can buy a car, get a mortgage, and trade millions of dollars of securities with a few clicks of a button, why does it still take 6 months for a venture fund to make a decision?
As the “super-angel” fund model begins more and more to more to displace the traditional VC model, look for speed to funding to greatly accelerate. Hallelujah!
Small Funding Rounds Dominate. As always, the most interesting companies from a growth and return potential standpoint raise relatively small rounds, with less than 2% of all of the CEOs surveyed had raised more than $5 million.
The World Needs Leaders. My favorite CEO comment from the survey, “They were willing to take the lead, and not simply wait around for someone else to take the lead. I want an alpha investor.”
Aint that the truth. Both being an entrepreneur and backing one requires all of those human qualities we celebrate in art and in life: foresight, guts, rugged optimism, a can do spirit, and laughing charitably at the naysayers.
21st Century entrepreneurship is all that and more. Yes, it is risky, but the opposite is far, far worse. As Teddy Roosevelt put it, it is that grey twilight that knows neither victory nor defeat.
And as this great CEO survey shows, luckily our world is filled like never before with men and women truly in the arena.
And about to make lots of money for themselves, their families, and those that back them.
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