Lux Capital's Josh Wolfe offers, "the best way to predict the future is to invent it". So where do they find the best inventors? At the elite research universities across the country, especially in California where Shahin Farshchi is located. "If you can actually de-risk a project early on, you're going to get a huge value inflection. I think of Risk almost like the First Law of Thermodynamics, it's not created or destroyed, it just changes forms; what Risk turns into is Value."

What to listen for: Josh and Shahin talk about the challenges in licensing technology out of research universities. Solar energy, electric cars and nuclear power, Josh shares his sector likes and dislikes.

Show #201 (35:08)

Dave Berkus returns from European travels and brings along Transcepta's Ray Parsons. John Huston and I haven't gone anywhere.

Ray announced a new fundraising initiative right in the teeth of the economic meltdown; we get an update on his progress and how he communicates with his 45 angel investors.

Then we dive into Fool's Gold; Scott Shane was recently on the show and his interview generated lots of listener feedback. Listen to the Chairman of the Angel Capital Association describe his reaction. And what does John mean by Standability?

Show #200 (52:08)

Quick! Can you think up some fishing analogies for angel investing? David Verrill, founder of the Hub Angels Investment Group, can.

You can't go to the Hub Angels website and apply; so how do entrepreneurs get evaluated? They must network through one of the members, to come in through a trusted source. That's different! David says it acts as a great filter and reduces administrative effort looking at deals that aren't a good fit.

He's got a fund to work with so he can afford to be optimistic: "I really have a good feeling about this environment, there's a lot of opportunity out there. When markets have a way of becoming more efficient, that's usually good and if you're well positioned during one of those shake outs, I think you're gonna end up far better than you would if you were sitting on the side lines." Yet entrepreneurs need a big dose of reality...

Show #199 (47:19)

A stake through the heart of angel investing?
"The reality is that very successful angel investing is quite rare."

If you take all the myths about angel investing and put them under the clinical eye of statistician Scott A. Shane you get Fool's Gold: the Truth Behind Angel Investing in America. Scott's the Malachi Mixon Professor of Entrepreneurial Studies at Case Western Reserve University and author of the must-read Illusions of Entrepreneurship; he's an angel investor himself and that's what started his inquiries.

Zingers for entrepreneurs, too?
A few. "I don't pay attention when an entrepreneur is presenting their financials... they're fictions created by the entrepreneur," then Shane lowers the boom: "they're telling us what we need to tell ourselves to motivate our investments." The bottom line: "there's very few great deals for angels."

Show #198 (53:54)

I met London blogger Permjot Valia in Halifax last month; he'll soon be appearing on the podcast. Until then check out today's post where he compares the decline of the FTSE 100 to where entrepreneurs should be re-calibrating their pre-money valuations: down 35-40%.

"I would have said that the FTSE 100 below 5,000 represents great value. It got to 3,755 and is now around the 4,500 mark. Does it represent a bargain now? I would have to give a politician's answer and say it depends on your time horizon and your expectations, but yes it does look like good value.

Therefore, entrepreneurs looking to raise money at the moment will have to look at the reality of the valuations they seek given where the market is at the moment. They need to be around 35% to 40% lower than this time last year. This is not just to bring you in line with other asset classes; it is also to reflect that your revenue lines will be a lot lower than you could have projected a year ago."

Link to the Business Angel Blog

Rob Koturbash of the Maple Leaf Angels in Toronto, author Bill Payne of the Vegas Valley Angels and Steve Block of the Tech Coast Angels huddle to read the signals for angel investing this season.Rob's group is young, almost two years at it, but he's seeing an increase in funding applications. How about his members? After seeing their net worth drop 25-35% they're shell shocked.

Are the fundamentals of the economy shaky? Yes, but does this warrant the emotional impact we all seem to be seeing in our fellow angels: sitting on their wallets.

Check out Bill's book and download his article on Bootstrapping.

Show #197 (51:07)

Having a hard time admitting failure? Most people do, yet there comes a time to cut bait and move on.

Got a distressed startup on your hands? Is this wrecked economy making it harder to raise needed funds? Running out of options? Meet Stephen Schulman of Insolvency Strategies, Inc.; maybe he can help. He takes companies locked in a death spiral and sells them, often for plenty of money! Does he anticipate business growing in 2009? What do you think?

Show #196 (29:35)

LeisureLink's Erik Hovanec tells these "old rich guys" that when it comes to working with startups, angels can't just mail it in. He doesn't need anyone to tell him there's a recession going on; instead he encourages angel investors to get involved in a long term supportive relationship.

Tech Coast Angels Dave Berkus and Richard Morganstern don't call him any names, but each of us has a few pearls of wisdom for the angels and the entrepreneurs navigating these raging economic waters.

Show #195 (50:03)