Super angels

There are the three contributing factors to the emergence of the current angel investor ecosystem:

1: With the emergence of new platforms and channels (like, but not only, the internet) the capital barrier to entry for new companies has come way down.

2: Now that we’re 10+ years into new media, there’s a large pool of experienced people who have accumulated enough wealth for speculative investments (and have the knowledge/courage to do so).

3: It’s fun to be part of the creation of new products!

Based on these three factors, I don’t see angel investing going away any time soon, in fact, I think we’re only at the beginning of a capital market that is going to be a major part of the innovation ecosystem for a long time to come.

What I like most about the proliferation of early-stage capital sources is that it means entrepreneurs have a wider array of choices, and thereby a greater ability to align their, and their investors’ objectives.  If you want to create one of Mike Maples’ Thunder Lizards and take over the world, you can call Mike.  If you think there’s an untapped niche and you’re sure you can create a highly-targeted service for it, you can give Dave McClure a call and be one of his 500 Startups.  You can swing for the fences, or try to lay down a bunt. 

I also think, in the end, the proliferation of early-stage capital sources will be a good thing for the big VCs, it means they’ll have many more sprouts from which to choose.  I do think it’s going to slightly push the focus of “traditional” VCs towards slightly later stages of company development. In the end, however, that will probably be a good thing as I think it will take some of the risk out of their deals.  So, yes, valuations will rise (a common complaint made by VCs about angels), but in parallel risk should fall.

What entrepreneurs really want

The law firm Dorsey & Whitney did a great study on “The evolving investor landscape.”  

What I liked most about the study are the quotes at the end. The themes in these write-in responses are probably worthy of being on the first page of the report rather than the last. What they illustrate is that what matters to entrepreneurs isn't just the financial dynamics, but the investor’s experience, trustworthiness, ability to form capital and if they’re availability to even return a phone call (or get a beer).  My guess is most top entrepreneurs would be flexible on valuation in order to get the right investor team pulled together.

Additionally, the right angel investor can make meaningful contributions to the development of a company. On stage, at a recent Vator splash event, Neil Young, the founder of ngmoco, recounted a pivotal moment where Mike Maples, one of his angel investors and board observers, made a key insight about their business model: http://vator.tv/n/1788 (right around minute 20:30) – having an experienced entrepreneur and angel investor at the table at that moment added a tremendous amount of value. This is a great example of why having a mixture of VCs and angels can, at key moments, be good for companies

Venture bubble 2.0

More than $5 billion of venture capital investment flowed into young web companies globally in the first four months of the year, data from Thomson Reuters Deals Intelligence shows.

Though small compared with the boom years, the sum puts 2011 on track to be the busiest in dollar terms since 2000, when more than $55 billion was deployed to back nascent technology firms.

The latest frenzy bears some of the hallmarks of the previous web investment craze -- exuberance over "concept" start-ups that have not launched their sites and intense competition among potential backers to place bets in presumptive hot spots, such as the social media space now defined by the likes of Facebook and LinkedIn.

Entrepreneurs such as Clara Shih, chief executive of Hearsay, a San Francisco-based specialty software provider, enjoy more leverage with investors than last time and talk about having their pick of potential backers. Shih said she had already raised $3 million, when cash came knocking at her door.

"Honestly, we weren't thinking of raising money, but now it's kind of landed on our lap, we may be open to it," Shih said in an interview with Reuters Insider.

Herd investment behavior gives rise to talk that another Internet bubble is forming, particularly when analysts see valuations on the order of $70 billion for Facebook and $15 billion for Groupon calculated from private investments.

"I've heard ... many venture capitalists who are saying, 'No, there's not a bubble,'" said Dana Stalder, a partner in the Silicon Valley office of the venture capital firm Matrix Partners.

"When you're seeing valuations double in the last 12 months for the same company, the same team, it feels like a bubble to me."

But other characteristics of the current boom do set it apart from the one that ended in collapse 10 years ago.

* VC investors say more of today's young companies are profitable or on a clearer path to profitability as the advent of cloud computing helps to lower operating costs dramatically from a decade ago

* Online advertising and e-commerce, in their infancy a decade ago, have matured into accepted and more reliable revenue sources

* The rush to cash out through an initial public offering has slowed. Bountiful sources of private investment, a raft of new public company disclosure regulations and the growth of alternative venues for trading private company shares provide the means and incentive to delay going public

Perhaps the most distinguishing factor from the "It's different this time" litany is that today's web frenzy is global.

In the three years that marked the height of the last boom, 1999 through 2001, the VC industry sank $96.4 billion into web start-ups, with more than 80 percent of that or nearly $78 billion in the United States alone, the Thomson Reuters data show. Of 10,755 VC deals over that run, 7,174 took place in the U.S. market.

Not so today. Of the more than $5 billion of VC money invested so far in 2011, just $1.4 billion has been deployed in U.S. start-ups. according to Thomson Reuters data. Roughly three quarters of the 403 deals have taken place overseas.

Moreover, it is the big deals that as often as not are now happening outside of the United States. Of the 25 biggest consumer Internet deals last year, 15 were non-U.S. investments, according to Quid, a Silicon Valley research start-up that tracks VC investment flows. Nearly half, 12, were Chinese.

The investors as well as the start-ups have an increasingly international flavor. Perhaps the most notable new face among today's Internet king makers is Russian billionaire Yuri Milner, CEO of DST Global. Milner has invested hundreds of millions of dollars in Facebook, Groupon and Zynga. Last month his firm invested $500 million in 360Buy,com, China's biggest business-to-consumer website.

The Disruptive Technology Rating

More than $22 billion of venture capital investment flowed into young companies globally in the first ten months of the year, data from Thomson Reuters Deals Intelligence shows.

Analyzing the distribution of investment in the aspect of technology, as well as conducting a content analysis of the views most cited expert, John Connor has made a preliminary rating of breakthrough technologies

The complete Rating of disruptive technology will be done by Edward Musinski

TOP 30 of disruptive technology

1. Mobile payments
By 2012, smartphone shipments are expected to exceed the sum of desktop and notebook PCs, according to Morgan Stanley research. Mobile payment platform – the most important technology for future
2. Real-time data connectedness. This is secret weapon of Google and other company which take control over many sites, marketing platforms and social networks
3. Clean energy including water purification. Future scarcity of water makes a demand of water purification technology with simultaneous production of energy
4.     Medical testing micro devices
5. SaaS and the ‘cloud’
6. Internet and mobile social network
7. 3d
8. Trading software
9. Online interactive games
10. 5G and LTE

11.      Contactless interface

12.      Discount E-commerce

13.      Geolocation

14.      Biodegradable polymers

15.      Software-powered brain devices (NBIC is mega-trend of XXI century)

16.      Informational security using artificial intelligence

17.      Real-time images identification technology 

18.      Augmented Reality 

19.      Vebinar and interactive video

20.  Regenerative medicine (Stem cells)

21.  Real-time speech recognition and voice translator

22.  Nanotechnology filtration

23.  P2P-lending

24.  OmniTouch display

25.  The Tip-Based Nanofabrication

26.  Energy Storage Materials

27.  Open source app

28.  Personal Genome Machine

29.  Wireless energy transfer

30.  Nano-drive

Startups In The Startup Genome

Based on the first Startup Genome report we are releasing a new survey for entrepreneurs to assess their startup. Entrepreneurs that fill out the test will be given their startup personality type, with personalized advice for what to focus on based on aggregate data from the startup genome project. The data we collect with this survey will allow us to give entrepreneurs even more granular feedback.

In the 20th century large companies became dramatically more efficient as a result ofscientific management. This was arguably one of the biggest causes for the explosion of wealth the world saw in the last century. The Startup Genome Report is a major step towards triggering the same transformation for entrepreneurship and innovation. In a time where progress seems to be slowing down, this could unlock another century of transformative growth and prosperity.

Following are 14 more of our key findings. If you would like to read the full report, you can download it here.

1. Founders that learn are more successful: Startups that have helpful mentors, track metrics effectively, and learn from startup thought leaders raise 7x more money and have 3.5x better user growth.

2. Startups that pivot once or twice times raise 2.5x more money, have 3.6x better user growth, and are 52% less likely to scale prematurely than startups that pivot more than 2 times or not at all.

3. Many investors invest 2-3x more capital than necessary in startups that haven't reached problem solution fit yet. They also over-invest in solo founders and founding teams without technical cofounders despite indicators that show that these teams have a much lower probability of success.

4. Investors who provide hands-on help have little or no effect on the company's operational performance. But the right mentors significantly influence a company’s performance and ability to raise money. (However, this does not mean that investors don’t have a significant effect on valuations and M&A)

5. Solo founders take 3.6x longer to reach scale stage compared to a founding team of 2 and they are 2.3x less likely to pivot.

6. Business-heavy founding teams are 6.2x more likely to successfully scale with sales driven startups than with product centric startups. 

7. Technical-heavy founding teams are 3.3x more likely to successfully scale with product-centric startups with no network effects than with product-centric startups that have network effects.

8. Balanced teams with one technical founder and one business founder raise 30% more money, have 2.9x more user growth and are 19% less likely to scale prematurely than technical or business-heavy founding teams.

9. Most successful founders are driven by impact rather than experience or money.

10. Founders overestimate the value of IP before product market fit by 255%. 

11. Startups need 2-3 times longer to validate their market than most founders expect. This underestimation creates the pressure to scale prematurely.

12. Startups that haven’t raised money over-estimate their market size by 100x and often misinterpret their market as new.

13. Premature scaling is the most common reason for startups to perform worse. They tend to lose the battle early on by getting ahead of themselves.

14. B2C vs. B2B is not a meaningful segmentation of Internet startups anymore because the Internet has changed the rules of business. We found 4 different major groups of startups that all have very different behavior regarding customer acquisition, time, product, market and team.

http://startupgenome.cc/discover-the-patterns-of-successful-internet