Even Angels Are Shying Away From Deals
from the tough-to-get-money dept
I hear all different stories. Some investors say they're doing plenty of deals, and others say they won't touch a start up at all these days. Throughout most of the downturn, though, plenty of early stage investors have kept doing deals - saying that valutions were dropping and it was the best time to invest. The ones who were going away were the types who probably shouldn't have been angel investors in the first place. However, entrepreneurs are now saying that even the angel investors are pushing valuations down to ridiculous levels. How is it that a company with $2.7 million in contracts can't get a valuation of $5 million? Update: Here's another article saying that even many investors are telling entrepreneurs not to try raising money from VCs or angels any more.
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A VC speaks
"Here is my two cents from what I see behind the VC scence. It is defintely very bad in the VC world right now - no question. Everybody tries to sound all upbeat by saying "Hey! We love this time! We are doing all sorts of deals". They are totally full of shit. The only deals they are doing are follow-ons for the deals they have already invested in or really spectacular companies with criminally low valuations. VCs are looking at lots of deals because that is what they are paid to do, but with few exceptions nothing new is going on.
Most entrepreneurs are still on crack. They say "I could have gotten a valuation of ten times this much 18 months ago". Well, it has nothing to do with how far down things have come. They need to completely forget that 1998, 1999 and early 2000 ever existed ...... ever. It is simply not a reference point at all ...... period. Nothing makes me want to vomit more than people telling war stories about what they "could have got" or "were valued at". Forget it! Please! Stop talking about it! 1998 and 1999 were just a wet dream!"
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