I am Frank Peters', Frankenstein. This is currently my favorite episode. I realize the reason I like it so much is because of what I learned from previous episodes of The Frank Peters Show.

I don't think it is possible to say the VC model is broken without saying there are also problems with the Angel model. Angel's have taken some cues from VCs on how and what opportunities to select. It would have been great if we were to hear the specific broken aspects of the model identified.

The need to do a better job at selecting winners and losers was mentioned. Improving due diligence was proposed as an answer. That assumes that the better opportunities are getting to that stage.

The issue of time was brought up; the need of Angels to exit relatively soon. It would have been nice to hear any thoughts on how to improve that, especially since it is often stated that Angels need to make 25 investments to get ahead.

Bill Payne comes across as both insightful and analytical. But I disagree with his statement "one of the leading indicators I believe in this recovery will be real estate." Real Estate has always traditionally been a market follower and not a market leader.

One cannot use bubble economies to determine indicators for normal economies. In a bubble there are many people who have lost money that just don't know it yet, until the bubble bursts.

People gladly over-invested in real estate because they didn't have other places to go. That's your leading indicator. What ever it is they start doing with their money.

I have found that analyzing jobs and employment data always precedes real estate data. When the employment data and real estate data do not mesh together harmoniously, something is going to go wrong.

After the employment figures get better, it is going to take a while for the majority of people to save up for the 20% down payment on real estate. So real estate will not be a leading indicator.

The problem with the VC model is the same as a similar problem in the real estate agent model. If your real estate agent sells your house he gets the full commission, if another agent sells your house your agent has to share the commission with the other agent. Your agent makes more money selling your house at a lower price than another agent selling your house at a higher price, because he doesn't have to share the commission.

VC funds went through the roof. They did not want to, and still don't want to, share the commission. It is impossible for a single VC to oversee a large number of startups. So instead they invest in a fewer number of large deals rather than a higher number of small deals. Most large deals lead to mergers or acquisitions. Even though mergers and acquisitions mean less profit than an IPO for those who invested in the fund, for the VC it means he will not have to share the commission.

Angels should be careful about taking advice from VCs who are actively screwing over their own clients. If they are willing to do that to the hand that feeds them, you know they are willing to do it to you.

The problem of collegiality was brought up in relation to not being able to perform a down round and not pricing follow-on rounds correctly. If it is a problem in that instance, it is very likely also a problem in the selection process and due diligence process. Different members will have different ideas on how to best conduct the selection process and what best to select.

If the problem of collegiality is handled effectively in the selection process, the handling of it there can carry over into handling it after the investments are made. It is also easier to address how it pertains to those parts of the process that are before money is invested.

So waiting for a follow-on round to tackle the problem of collegiality is waiting until it is a bigger issue and harder to deal with. Better to nip it in the bud by addressing it in the selection process, and then the due diligence process, making it easier to address it in a follow-on round.

In order to deal with the problem of collegiality, maybe TCA could reformat its selection process and fast pitch competition to be less collegial and more business minded.

You could call it Thunder Dome or The Coliseum, and see which opportunities survive, if any. "Think Angel Idol" or "Venture Idol" or the old Gong Show. Make it a tough question and answer session for the entrepreneur from which he can be pulled off the stage at any time.

It might even be more entertaining than hearing a pitch. But it would be more informative than just a pitch and could lead to the better due diligence that Dave Berkus said is needed. Angels would learn from the questions that other Angels pose to the entrepreneur.

So who would be TCA's Simon Cowell? That might turn out to be a heck of a cull. It is easy to be brave enough to pitch, but to try and not be booed off stage; that would cause entrepreneurs to think things through better before going up.

This could turn out to be a good exercise for Angels in being more businesslike with each other and a little less collegial. The experience could positively carry over into their investments.

I found it ironic that before you aired this show I had just sent you an email stating my opinion that the problem with Angels is that they don't get angry enough about the money they lose. The panel in this interview all agreed that collegiality is a problem, and you mentioned that instead of making the hard but necessary decision Angels get defensive and try to protect their friends.

With that kind of help, that is actually consoling and not help, it makes it easy for Angels to suppress their tempers. I say "let the spirit out", and let it do some good for you. Don't suppress yours or your friend's bad feelings about an investment gone badly. Let those ill feelings direct you to proper action.