Challenge and Opportunity: Angel and VC Funding During an Economic Crisis

David S. Rose (Angelsoft), Jason Schwartz (Angelsoft)
Average rating: ***..
(3.00, 1 rating)

With the public markets in free-fall and massive layoffs around the globe…this is a great time to start a company! But it also means that the game has changed—drastically—both for companies seeking startup funding and the angels and venture capital funds who invest in them.

In the old days (before September ‘08), the goal of seed round funding was to prove out a business model. This would be followed by an institutional Series A round within the next year that would provide the capital for hockey-stick revenue growth. Today, there is no hope of an IPO for the mature companies in a venture portfolio, and the bottom has fallen out of the M&A market for strategic acquisitions. VCs are concentrating their resources on supporting their existing companies, and the trickle down effect means that little or no money is available for companies seeking outside follow-ons.

As a result, for 2009 angels and seed funds are only investing in companies that can prove they can get to profitability on the FIRST investment. This, in turn, means lean and mean business plans are the order of the day, with investors often willing to forgo the classic revenue hockey stick in favor of break-even operations that self-fund a significant growth in enterprise value.

Learn from one of the country’s most active angel investors what opportunities the current market dislocation is creating, and how startups can, and must, go lean to take advantage of them.

Photo of David S. Rose

David S. Rose

Angelsoft

David S. Rose, described as “the Father of Angel Investing in New York” by Crain’s New York Business, is a serial entrepreneur and Inc 500 CEO who is Founder and Chairman of New York Angels, one of the most active angel investment groups in the country. He has personally helped to fund over 50 startup companies in technology and new media, and was described by Red Herring magazine as the “Patriarch of Silicon Alley”. As an entrepreneur, he is CEO of Angelsoft, which provides the web-based ASP back-end for over 275 angel groups in 22 countries, and as The Pitch Coach, he is regarded as the country’s leading presentation trainer for entrepreneurial financing road shows.

Jason Schwartz

Angelsoft

Jason D. Schwartz is primarily interested in developing social applications that appeal to mainstream users. In that vain, he closely watches over the entrepreneur community at Angelsoft.net, the Angel Investment industry deal flow management platform and blogs about the topic at RobberBaronBlog.com

Comments on this page are now closed.

Comments

Leon W Podkaminer
04/04/2009 9:57am PDT

Excellent overview of the current investment climate! I especially liked the explanation of what each quartile of funding applicants represent. Thank you David and Jason!

  • 3Tera, Inc
  • Ascentium
  • Awareness
  • HiveLive, Inc.
  • ImageSpan
  • Jive Software
  • Juniper Networks
  • Kapow Technologies
  • Keynote Systems
  • LithiumTechnologies
  • Nokia
  • nomee
  • Qtask
  • Rackspace Hosting
  • Remy
  • TamTamy
  • Vignette
  • Yola (fka SynthaSite)
  • Znak
Sponsors
  • IBM
  • eBay
  • Microsoft Corporation
  • Salesforce.com
  • Adobe Systems, Inc.
  • EffectiveUI
  • Germany Trade & Invest
  • NeuStar
  • ONEsite

Sponsor & Exhibitor Opportunities

Natalia Dugandzic
415-947-6709
ndugandzic@techweb.com

Media Sponsor Opportunities

Matthew Balthazor
949-223-3628
mbalthazor@techweb.com

Speaker / Program Ideas

Have a suggestion for a speaker or topic at Web 2.0 Expo San Francisco? Send an email to: sf-idea@web2expo.com

Press/Media Inquiries

Maureen Jennings
707-827-7083
maureen@oreilly.com

or

Natalia Wodecki
415-947-6762
nwodecki@techweb.com

Contact Us

View a complete list of Web 2.0 Expo contacts.