What will the next few years be like for angel investors?
What will the next few years be like for angel investors? I have been thinking about this topic a lot. At this point I have made more than 90 investments over the past 8 years. It has been an amazing ride. Not only has it been rewarding as well as intellectually stimulating, I have met incredibly smart driven people.
I have no interest in stopping what I do but it is important to take a look at the past while looking into the future. In the past year I have seen almost two dozen of the companies I am invested in move forward with another round of funding and there are more to come. Part of my thesis is to participate in those rounds until I hit a certain number where I feel as if I have enough capital at risk. That number is consistent unless I choose not to participate. Not only do I have capital at risk, I’ve made it my full time job is spent working with these early stage companies and of course looking at new ones walking in the door.
After 8 years of insane acceleration of start-ups in every vertical I can’t help but wonder what’s left to build? Of course there are plenty of verticals that will change dramatically with new businesses and thought leaders over the next decade such as healthcare but how many new mousetraps in areas that have already had massive change in the last 5 years be supported by the investor community?
Adam Quinton posted The Coming Angel Ice Age, a worthy read about what he is seeing and quite frankly what I am feeling too. Excessive supply vs angels bandwidth is essentially the root of what Adam is talking about.
The good news is over the next few years I believe we will see more companies become profitable early on without raising multiple rounds. There are pros and cons to that. The pro is obviously the founders become masters of their own destiny on many levels. The con is it is difficult to really put your foot on the gas to build a huge business when you are relying on capital from annual profits. It can be done but not as quickly.
Not sure I have a wrap up on this post but this is something that I will be thinking a lot about in 2016 as new founders walk into my door.