High-potential companies often need investment. Angels and Angel groups need dealflow; i.e. to know about and see such high-potential companies so that they may invest in them.
This seems like a simple equation, but there are times when such simple market clearing isn’t so simple. Information asymmetry problems regarding what Angels are interested in and the level a company must be at to entice investment and what investment opportunities are actively looking for financing are often the cause this market failure.
One way to overcome this problem is for Angel group managers and individual Angels to take an active role in the community in which they live or the sectors in which they are interested.
Over the past several years a number of communities have coalesced across Canada; what I call the BarCamp Phenomenon. Defined as user generated conferences — open, participatory workshop-events, whose content is provided by participants — BarCamps, DemoCamps, TorCamps, etc. attract some of the newest, hottest companies, often in the ICT/Web sector, emerging in your community!
Since their founding in Palo Alto, California, from August 19-21, 2005, in the offices of Socialtext, BarCamps and their derivatives have spread throughout the world and are now held in almost any major city you can think of, from Montreal, to Toronto, to Calgary to Chennai.
At such events in the past week alone, in Southern Ontario, I have seen demos from and met the founders of such companies as Gigpark, PlanetEye, AskItOnline, and Scenecaster. I have also been tantalized by hints about the new, top secret start-up (Akoha) from serial entrepreneur and Angel, Austin Hill.
As a best practice, Angels and Angel groups should be actively engaged in their local communities, one of which, I would suggest be their local BarCamp community. Not only does this ensure they are connected within the startup ecosystem and seeing the best, hottest companies emerging in their backyard, but it also gives them a chance to provide feedback on emerging opportunities and play a role Angels often take on, that of a Mentor.
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3 responses so far ↓
Overcoming Adverse Selection: Avoiding Lemons and Ensuring the Best Risk-Adjusted Return « National Angel Organization // March 2, 2008 at 6:03 pm |
[...] 2, 2008 · No Comments Following on from my post the other day about Angels actively engaging in their community, I thought it important to outline exactly why information asymmetry, as discussed, can be such a [...]
Remarkk! » Duh, Community IS the Framework! // March 6, 2008 at 2:11 am |
[...] National Angels Organization has found religion, the Financial Post picked up the excitement, the Toronto Board of Trade loves being host to the [...]
Overcoming Adverse Selection: Avoiding Lemons and Ensuring the Best Risk-Adjusted Return « EP Enterprises // May 6, 2008 at 3:33 am |
[...] on from my post the other day about Angels actively engaging in their community, I thought it important to outline exactly why information asymmetry, as discussed, can be such a [...]