Archangel Gossip Session #2 — Notes

What are some of the COVID proof startup opportunities?

  • Ecommerce and logistics are obvious ones but there are challenges to scale in COVID times
  • Smaller players might find difficulty scaling a network due to supply side constraints (eg lack of drivers).
  • Logistics players more generally are under a lot of pressure due to demand spikes from lockdowns.
  • Businesses that support hybrid and remote workforces — eg Remote Social.
  • We discussed Space tech.
  • A lot of hardware focussed companies especially upstream — only starting to adopt start-up tech more recently.
  • Space industry was on hiatus due to COVID providing opportunities for new players.
  • Some emerging players are using existing infrastructure which lends itself to VC investment as there is not prohibitive initial capex in hardware.

YC post demo day valuation discussion

  • Very hot market globally
  • YC post demo day, we see pre-revenue @ $15m — 2nd time founder @ $20m valuation.
  • Also can lead to unfavourable deal terms for investors — eg uncapped SAFEs with no discount.
  • Valuations are running all the way through the curve — seeing consistently secondary deals with ordinary shares worth 150% on the round value within 12 months (in the US). A lot of undisciplined money coming from overseas which is pricing the IPO into the later stage rounds.
  • Discussed AngelList roll up vehicle (RUV) product — no fee no carry service for accredited investors to potentially put in a few thousand dollars each. Can be very useful to bring on strategic investors without having to cut big cheques.
  • Hot deals on syndicated platforms can go super quick even at high valuations — rounds can be filled in 20 minutes.
  • Some companies being actively coached to not provide pro rata
  • YC becoming known as an established place to find winners so increased competition — valuation is all relative — it still can be a great place to find deals given their vetting process potentially does add value especially in challenging geographies.

Best places to find deal flow for certain verticals

  • We talked about places to find quality deal flow for female led startups and facilitated an introduction with Springboard.

The importance of an “accountability buddy” when you angel invest

  • A lot of angels expressed that they do use a buddy or group of friends to keep each other honest and benefit from shared experience.
  • Prevents you from only talking about the winners.
  • Long feedback loop — having someone that you can share the wins and losses over the journey can be very beneficial. Multiple perspectives help you see around corners — helps making decisions not to invest in companies.
  • There are some communities starting to build eg Startmate First Believers — 42 people — weekly/fortnightly master classes — starting to share some deal flow.

Insider rounds — what are they and what do they tell you

  • Generally is one of two opposite signals. eg either a really hot deal rewarding initial investors or an attempt to save the company to bridge to the next phase. Usually it’s the latter and as an insider you will know!
  • Differences between venture funds vs angels — funds make an implicit commitment to see the company through to the end and you will usually follow on unless you’ve really lost faith.
  • Investors may throw a lot of good money after bad to bail failing companies out
  • Can be helpful to clearly set the expectations with the founder before the initial investment, what progress you need to see to justify following-on and investing more.
  • Execution rarely goes to plan — trouble can be an opportunity to be a contrarian and get the best deals. Challenge is spotting what is real trouble vs. “teething issues”.

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Rayn Ong

Rayn Ong

Passionate startup tshirts collector (size M). Ex half-stack developer. Mentor @startmate. LP @blackbirdvc