I wrote a check today, the first one in quite a little while, for a new startup here in Orange County. I'll share more details about the company and its great promise in an upcoming post, after the deal closes.

Am I a bellwether of a new season of confidence in Southern California?

Why wasn't I writing checks earlier?

Let's take stock...

In reverse order, I wasn't writing checks for new startups in part because I have a large portfolio of early-stage companies and many of them came back for more money last year in pay-to-play rounds. I had to allocate funds to participate in merit-worthy rounds or else, in most cases, I'd be converted to Common and diluted up to 90%; that's an incentive. I didn't participate in all of these rounds; I said goodbye to at least two of my deals thinking I'd rather invest in something new.

So why didn't I?

Although many angel groups report seeing lower pre-money valuations from funding applicants, here in Los Angeles entrepreneurs were slow to ratchet the numbers down and equally troubling, TCA's pre-Screening committees seemed to think we could negotiate more reasonable valuations later in the process, like during due diligence. This approach had worked since the beginning, but it wasn't gonna work in 2009, because, just like in Real Estate it's said, if a home is priced too high it won't attract many offers. And that's exactly the way I saw it in 2009, deals that were too rich; it was easy to pass.

Am I a bellwether of increased confidence? Maybe, but more importantly, all the pieces are coming together. Here's a deal, let's call it V, with a lot going for it. They've got skin in the game. They've raised a friends and family round. They're coachable. But most importantly, this is a member-led deal. One of our own found this company, invested $50k of his own money and is acting COO, then he attracted another TCA member to act as a part-time marketing consultant for the company. Picture the scene when they appeared at the TCA Screening last month: they look solid. (Of course, from a portfolio perspective, they have a 50-50 chance of being in business a year from now, but still.) The other angels in the room loved seeing this member-led deal and we have our first over-subscribed deal in quite some time.

So listener Nick, when he questions, "Who Wants To Be A Deal Lead?", this is my reply: find an angel and get him involved early. It's not easy, you're right. But later when you advance to meet more angel investors, you'll get a warmer reception. The alternative is to simply apply online and run the gauntlet, but then it's too easy for angels to sit back and be critical. If you can find an angel to join your board and make an investment, that demonstration of confidence will resonate with his angel peers.