Thank you for your show! As soon as I raise money for my project I am going to be a paying supporter.

Frank;

Good stuff, keep it up.

BTW, Richard Sudek is spearheading a lot of good improvements to TCA.

Just a quick note of appreciation for the GREAT interviews you do! So very
well done, GREAT questions, GREAT guests and very educational.

Do you only focus on west coast start-up investing?
I need a New York Angel:-)

I'd really like to hear more about what John Morris posted. "Richard Sudek is spearheading a lot of good improvements to TCA".

Again, I think you sound a lot better. More spring in your step. Especially the way you plugged your sponsors, you make them sound good.

It was very nice to hear you end the podcast saying we can learn. Especially when in the middle you said "there is no way to pick the winner" even though you have had investors on your show who have told us they do much better than the spray and pray method. If it was true that the winner cannot be predicted, then there would be no such thing as the successful serial entrepreneur; but we have heard them named and mentioned on your show.

Yates' comment referring to venture investors as lemmings following the crowd also indicates the problem is not that "there is no way to pick the winner", but more of an unwillingness to do the homework required to do so. Angels often speak of what they have learned from the deals that have gone bad and that they won't do that again; another indicator that picking the winners can be learned. The success of technology transfer offices at universities also indicate that it can be learned.

Because of the problems Yates mentioned associated with Angel money, I would disagree with his assertion that Angels need to act more like VCs. Doing so does not remove those problems and in fact adds another one.

Angels are never going to successfully compete with venture firms for the same deals. To solve their problems, Angels must go where the venture firms are not. One such area is what I call Pre Patent/Post Research. The math justifies this and it doesn't require nationwide syndication. Universities are successful at it without syndicating.

Angels need to come to the realization that there are a finite number of good deals per year, and most are not in the Angel space. There are a finite number of people thinking up the good deals and there is a finite amount of money in the world changing hands.

To generate revenue, deals have to dip into and or divert the finite number of existing cash-flow streams in the world. No one is going to present a deal that prints its own cash. The finite number of cash-flow streams means there is a finite number of possible good deals.

The fact that TCA is expecting two IPOs this year is a very big deal. And yes IPOs tend to draw more investors into the game, especially those who don't realize just how rare they are in the total scheme of things. What percentage of venture backed IPOs this year do you think TCA's IPOs will represent? Two IPOs is a significant percentage even in a year with a robust number of venture backed IPOs.

It has been reported that after the dotcom bubble, the highest number of venture backed IPOs in a given year was only 80+. Divide that into the number of VC firms and Angel groups, and we can see how special TCAs two expected IPOs really are.

I have a theory as to why Angels and VCs hold onto this idea that it is all luck and the winners cannot be predicted. It is not just the problem of collegiality that Angels have previously mentioned on this show. If Angels admit that there are people out their with better track records of picking winners, they also have to admit the math that shows us the rarity of doing so, and the math that shows us the finite number of possibilities at any given time. That means Angels would have to admit that they have to compete with their brains, research, and analysis.

The factual lower number of potential winners makes it less exciting and the work of discerning the few winners is less attractive than believing one can succeed by being a lemming. Angels want to compete with their money instead of their brains. It is ironic that we hear Angels complain about entrepreneurs who think money is going to solve their problems when Angels are acting exactly in that manner.

The facts beg the question, "what did Frank mean when he said we can learn"? Are we just looking for the right path for the lemmings to take or are we willing to drop the old notions that have been very expensive with limited and sometimes no success?

Frank, you could improve your show by qualifying some of the statements you and or your guests make. Rather than accepting them as constant truths, it would be better to admit that they only hold true under certain conditions and when people are acting a certain way. Acknowledging the limits of the statements being made forces you to look at the other side of the coin and leads to deeper and more meaningful discussions.

For example, the electric motor was around for decades as frivolous nonsense with no market for it, because there was no reliable, powerful, or portable supply of electricity. Generators and batteries were developed decades later. Luck had nothing to do with people's decision to work on developing generators and batteries. The motor already existed and so they could see the need.

Whenever Angels look back at a failed investment, we always hear them say, if I had known this, or realized that, I would not have invested. We never hear them say it was impossible for them to have learned that before they invested. This is yet another fact that says luck has little or nothing to do with it. For those that are willing to admit it, it is always a case of faulty analysis.

The reluctance of Angels to take on the role of Deal Lead shows that there is also a reluctance to do or listen to thorough analysis. But no no no, the problem can't be the Angels. It's always the entrepreneur, or the market, or the VCs left us, wa wa wa wa wa. VCs wouldn't have left if the Angels brought them something they could add value to, the market won't leave if it satisfies their need. But no, it can't be the Angels, it's just luck, and so we hear the Angels beg "luck be a lady tonight".

Frank,

I miss quoted the article that I read. I was wrong to say "It has been reported that after the dotcom bubble, the highest number of venture backed IPOs in a given year was only 80+."

I should have said "homeruns" instead of "IPOs".

This is a very important distinction as not all IPOs are homeruns.