Angel investor and entrepreneur, Andrew Fern has a great Australian accent. He listened to Charlie Hobbs' interview and it really hit a nerve, so we've started this series of Saturday (in Australia) conversations. In this wide ranging Part I, we cover inventors versus entrepreneurs, the 'Bathtub' analogy, advertising versus subscriptions, and many other issues facing angel investors at this time.

Show #218 (34:17) Listen

Events
The SW Regional Angel Summit in Tucson March 22-23.

The Anaheim Center for New Energy Technologies is hosting the Clean Tech Business Plan Competition. Deadline for entries is March 16th.

Attend the Angel Capital Association's Annual Summit in Atlanta April 15-17.

Join me; I'll be moderating 2 panel discussions in Madrid April 27-28 at the
9th Annual EBAN Congress.

Have I become too cynical?

I've certainly been skeptical when my fellow angels say "downturns have historically been good times to invest in early stage companies".

John Taylor from NVCA said something similar recently and I jumped on it, but I don't have the statistician's swagger that say, someone like Fools Gold author and myth-buster Scott Shane does. So I sent him a late night email: "help me let the air out of this balloon, is 'now the best time to be investing'"?

His response surprised me. "First of all, I need you not to ask me such interesting questions! I spent four hours this morning looking at data to get you an answer!"

So who's right? Will I be eating crow or are those platitudes correct?

Show #217 (14:12) Listen

New York Times OP-ED columnist Thomas L. Friedman suggests an alternative stimulus plan: Start Up The Risk-Takers.

"You want to spend $20 billion of taxpayer money creating jobs? Fine. Call up the top 20 venture capital firms in America, which are short of cash today because their partners - university endowments and pension funds - are tapped out, and make them this offer: The U.S. Treasury will give you each up to $1 billion to fund the best venture capital ideas that have come your way. If they go bust, we all lose. If any of them turns out to be the next Microsoft or Intel, taxpayers will give you 20 percent of the investors' upside and keep 80 percent for themselves."

Read the full article.

It's been awhile since we've heard from Make It Work, but recently they've been able to turn a profit, just at a critical time. Co-founder Eric David Greenspan shares how they've turned the corner with his residential computer support services company.

Protecting kids online has been a growing part of the business, so he's created poogling.com.

Show #216 (24:06) Listen

Events
Pitch at Fast Pitch at UCLA, Feb 24th

The SW Regional Angel Summit in Tucson March 22-23.

The Anaheim Center for New Energy Technologies is hosting the Clean Tech Business Plan Competition. They're giving away $40,000 in cash prizes for the best clean water and energy innovations. Deadline for entries is March 16th.

Attend the Angel Capital Association's Annual Summit in Atlanta April 15-17.

Join me; I'll be moderating 2 panel discussions in Madrid April 27-28 at the
9th Annual EBAN Congress.

Today EBAN, the European Trade Association for Early Stage Investors in Brussels, published their view on how the current economic crisis is impacting angel investing.

This topic will be discussed at EBAN's 9th Annual Congress "Celebrating Risk Taking" April 27-28 in Madrid.

Read the EBAN Statement on the Financial Crisis.

Meet John Taylor, VP Research at the National Venture Capital Association (NVCA). He joined to provide quality data on the industry and with help from Thomson and PriceWaterhouseCoopers he generates gobs of statistics.

"For venture capital to be successful all the pieces have to flow," the companies "go public and the money then is cycled back into the next generation of companies. Right now there are incredible stresses on that system."

What to listen for: It's not all bad news; there's lots of talent available, and good business plans, but the attention span of the venture capitalist is an issue.

Show #215 (46:22) Listen

Events
Pitch at Fast Pitch at UCLA, Feb 24th

The SW Regional Angel Summit in Tucson March 22-23.

The Anaheim Center for New Energy Technologies is hosting the Clean Tech Business Plan Competition. They're giving away $40,000 in cash prizes for the best clean water and energy innovations. Deadline for entries is March 16th.

Attend the Angel Capital Association's Annual Summit in Atlanta April 15-17.

Join me; I'll be moderating 2 panel discussions in Madrid April 27-28 at the
9th Annual EBAN Congress.

Meet Ken Pickar, angel investor and Caltech professor. He teaches product design, with projects like making wheelchairs from bicycles which can be built in Guatemala. The class combines students from Guatemala, the Pasadena Design School and his students at Caltech.

He's a Tech Coast Angel and sits on private and public boards, like telecom NeuStar which went public in 2005. He sits on the board of the LA Regional Food Bank which feeds several hundred thousand people each week. All these experiences are a way of keeping himself contemporary; his students aren't hearing old war stories.

Show #214 (46:08) Listen

Events
Pitch at Fast Pitch at UCLA, Feb 24th

The SW Regional Angel Summit in Tucson March 22-23.

The Anaheim Center for New Energy Technologies is hosting the Clean Tech Business Plan Competition. They're giving away $40,000 in cash prizes for the best clean water and energy innovations. Deadline for entries is March 16th.

Attend the Angel Capital Association's Annual Summit in Atlanta April 15-17.

Join me; I'll be moderating 2 panel discussions in Madrid April 27-28 at the
9th Annual EBAN Congress.

There must be a better way. I've been an angel investor for more than 10 years now; clobbered by the Internet Bubble and now this. If I claimed I'd lost 40% of my net worth no one would be surprised, I'd be in good company. To heck with giving back and doing the right thing! If I'm such a smart guy why can't I make any money at angel investing? I suspect there are fundamental problems with the way I've been going about it. Pain to this degree is motivating; I'm ready to rethink my approach. Sacred cows are too expensive; I'm taking a fresh look at the successes and failures in my early stage portfolio.

Ian Sobieski of the Band of Angels says that M&A buyouts of angel-backed companies only gets us to a breakeven point; big gains only happen with IPOs. Fools Gold author Scott Shane suggests that if angels want more IPO exits then they should invest in the kinds of companies that typically go public. What kind of companies are these? Although we haven't seen many lately, it's easy to describe what they're not. Palomar Ventures' Randy Lunn says that successful investing is all about finding the companies that can scale. The way I put it, we want companies that can achieve rapid adoption in very large markets. Let me suggest some that might be better suited to an IPO and those that aren't.

Research VP John Taylor at the National Venture Capital Association says IPOs are often companies that are easy to explain and simple in their approach, product or technology. We've all heard plenty of complex and esoteric pitches, let's avoid these.

Continue reading at socalTECH

David Verrill of the Hub Angels, ACA Chairman John Huston and Tech Coast Angels Peter Cowen and Dave Berkus join me as we discuss the challenges facing angel investors and entrepreneurs today.

All those billions and trillions in the bailout and stimulus bills, just how much money is a trillion? John Huston walks us through some analogies. Dave Berkus quotes from his "Ten Trends". John's raising a new fund. At Hub, David's plan is to raise 18 months of cash flow for his deals. If they can't raise that amount, the deal won't get funded. And Peter's doing a Fast Pitch at UCLA.

What do we all agree on? We like opportunities for software operating in the cloud computing model and web-based businesses with an advertising model, we agree we don't like.

Show #213 (50:57)

Upcoming events:
Fast Pitch at UCLA Tuesday Feb 24th 5-9pm

The SW Regional Angel Summit in Tucson hosted by the Desert Angels, March 22-23, registration is open.

CLAIRE CAIN MILLER and BRAD STONE report in today's New York Times the stories of angels paring back on their investments in tech startups. Rose Ors founder of LA-based TwoSmartDogs tells her story of succeeding in raising an initial $715K angel investment only to fold in the current environment when no further funding was available. "Many angels suffered deep losses when the market plunged last fall."

"A lot of companies view us to be the on-ramp to the venture capital superhighway, and a number of angels are less convinced that they should count on the superhighway this year," said John O. Huston, chairman of the Angel Capital Association.

The real impact will hit Silicon Valley two or three years down the road, said Mark Heesen, president of the National Venture Capital Association. That is when start-ups that receive angel financing today would typically turn to venture capitalists for their first round of institutional investments, known as a Series A.

"If we don't have angels, that hurts us. Where are we going to be getting our next Series A deals if those entrepreneurs aren't out there with the ability to move their idea forward?"

Read full article...

Tom Phelps of Manatt, Phelps & Phillips, LLP describes how he built his practice serving the banking industry. At one point in the 80's he had 13 clients in trouble with the FDIC, so that gives him some keen insights into the current crisis, "this feels like been there, done that".

What to listen for: From the earliest days when Tom and Chuck Manatt started the firm to the current economic crisis, you'll get a sense of the man and his career. When we switch gears and talk about "Tom Phelps, the man", he begins by telling me "you may be surprised". You may be, too.

Show #212 (51:30)

Upcoming events:
Fast Pitch at UCLA Tuesday Feb 24th 5-9pm

The SW Regional Angel Summit in Tucson hosted by the Desert Angels, March 22-23, registration is open.

CANCELLED: UCSD's 6th Annual Entrepreneurship Conference February 28th.