What's the Matter With Angel Investing…A Lot and NOTHING!

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  • on September 27th, 2010

There is nothing wrong with Angel Investing.

There is ego and attitude and mistakes, but the cat is out of the bag.

In fact, there has never been such clear and concise information on how to be an entrepreneur and an angel investor. If you don’t believe me, read just Mark Suster’s last post and you will be well on your way to obscene inside knowledge

We are in a super super super bull market for start-ups. Like $CMGI when it started and Internet Capital group, there are massive runs ahead. It just won’t be broad and like the last one. You won’t be able to invest in anything and have the markets bail you out.

Funny, but in 2008, the $VIX was at 90 and the once in a lifetime panic was in full motion. Venture Capitalists were writing death knells. I was investing. I was speaking at a conference in Toronto and showing charts of the $VIX and $SPY and saying it was NEVER a better time to start a business. I can’t find the post but I know Jevon was there and will vouch for the speech and slides. I was talking my book and had been heavily investing since 2005, but it so far looks like I might be right.

It turns out, only Wall Street died. Sure bonuses are back, but as Andy Kessler accurately describes:

There are too many traders, bankers and salesmen to support the new level of business. Thanks to Dodd-Frank, the shrinking of finance will continue.

The only thing that will kill angel investing in the forseeable future is the government. I have to say it’s a gynormous risk. Idiots are in charge and idiots do the wrong things at the wrong time. That said, there will never be enough optimistic angels looking to roll up their sleeves and put money to work. Most, if not all of these angels could give a rat’s ass about Wall Street, derivatives, mortgages and stocks…maybe even taxes. It is getting super competitive and crowded, but it will evolve and spread. Groupon is in Chiitown…

Personally, harnessing this momentum is where I see the opportunity going forward but as always, I am fleshing out my thesis and flying by the seat of my pants. If I practiced just what I preached, I would be retired and just tweeting goofy stuff.

There is just too much optimistic and patient angel money wanting to get put to work. It won’t end well, but it is likely just the middle innings of this run.

There are deals and exits by the minute and although top lines and bottom lines are pretty hard to grow, the 2008 depression made the bonanza ahead happen for start-ups and angels.

The super smart money is snickering and moved on, but take a look at the price action in momentum stocks like $BIDU, $NFLX and $AMZN (hundreds more) and tell me that a bazillion acquisitions using high stock prices and cash won’t continue. It will, it should and we should be supporting it, not trying to break it down and overthink it.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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