You won’t find an angel in a dragon’s den

by stevejalim • 13 years ago

53 12 13 years ago

ganeumann• 13 years ago

I've always wondered about the implicit economics of some of these angel groups. They seem to spend an awful lot of time getting to the point where they can write a small check. If the expected value of the rate of return of venture investments is ~20%, then it would seem they're barely making minimum wage.

On the other hand, contra the article, I've made angel investments after a pitch. Angels write small-ish checks, so making the founder do a song-and-dance over the course of many meetings would be uneconomic for him. It's a bit different if you're a partner at Greylock writing multi-million dollar checks.

hugorodgerbrown• 13 years ago

In the UK there is a scheme called SEIS (Seed Enterprise Investment Scheme) which gives investors 50% tax relief on equity investments up to £100K per annum. This is great for startups, as it has resulted in a lot of people investing for tax efficiency (and hence why most angels look to invest up £50K in any single investment, so that they can spread the risk); however, the side-effect of this is that a lot of people who would otherwise have simply invested in markets have become 'angel investors'. Joining an investment club seems like a sensible idea for these investors, however they often lack the experience required to understand (or indeed empathise) with the entrepeneurs they meet.

lucisferre• 13 years ago

Canada has similar programs. EBC (in British Columbia) provides a direct 30% refund on investment in eligible companies [1].

[1] http://www.pushormitchell.com/law-library/article/30-tax-ref...

Pxtl• 13 years ago

Yeah, that. When I watch Dragon's Den in Canada, I'm always struck by how small-potatoes these investments are, considering the kind of people who are in the room. And yet they so rarely even chip in.

I think a lot of the appeal of working on one of those shows, as an investor, is what it does for their own personal "brand" more than the direct salary or the investments they make.

fein• 13 years ago

Competitive pitch events seem like they would be detrimental to doing good business for both parties involved.

It's all just needless drama, as if multi million dollar investment deals aren't exciting enough. These kinds of things should be dealt with in a professional matter, especially given that I doubt most startups view their product as the equivalent of an unpurchased property on a Monopoly board during the tenth roll.

On an unrelated note, can someone please confirm my suspicions that the header image used is from Guildwars?

andrew_gardener• 13 years ago

I know what you mean, it looks like a lot like one of the loading images used in GW2

I did a quick Google search though and found this http://jcbarquet.com/ which makes since since they credit him in the bottom right of the picture

Dilan• 13 years ago

Just by having your product on Dragons Den you agree to giving them 5% of the company irrespective if there is an investment made or not.

booruguru• 13 years ago

I thought that was just for Shark Tank...I can't see how a government broadcaster (CBC or BBC) would be able to get away with that.

mathattack• 13 years ago

That seems like an investment in advertising, more than looking for a free investor. In this case, it's more economically feasible for the small potatoes firm than the big fish. 5% of a firm worth 20K - that's $1000 for a ton of advertising. 5% for a firm with traction work 20 million - no way!

stevejalim• 13 years ago

Really? That's partly a surprise, given the public nature of the BBC, yet also not a surprise, given the value of the airtime one gets, even with a lame duck of an idea.

Got a link/reference for this 5%? If not, how did you learn of this?

steveplace• 13 years ago

I had a friend that had his company on "Shark Tank." The 5% can be either equity or just based off sales.

mistermann• 13 years ago

I don't have a link but I'm pretty certain I've read that elsewhere as well from a pretty trustworthy source. It's not terribly unreasonable, but does seem a bit....predatory(?)

You won’t find an angel in a dragon’s den

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