November 3, 2013

Should Boston Angel Investors Be More Active AND Visible?

Last week, Jason Calacanis's sit down with Bill Warner for This Week in Startups was released. In it, Calacanis and Warner discussed a number of topics including Warner's life in tech and angel investing. At one point, AngelList Syndicates was brought up and Calacanis tried to get Warner to agree to start one. Although he did take a moment of pause to think about it, Warner won't be starting his own AngelList Syndicate anytime soon.

One of the constant riffs against Boston as a major startup hub, which Calacanis mentioned during TWiST, is the perceived lack of money flowing from the large number of venture capitalists based in the area to the ever-growing group of innovative startups. To outsiders, Boston is still stuck in the old Wang/Digital days of non-competes and almost puritan-like, hard earned, unheralded successes.

One example of a company that suffers from some of this thinking may be Wayfair, who we covered last week. Wayfair is a company that didn't seek any funding until it rebranded from CSN Stores a couple of years ago, and up to that point, wasn't on too many people's radar. And yet, it was a monster company that VC's were just itching to get involved with. So why don't more people know about companies like Wayfair?

Anyone you talk to in the Boston innovation community over the past couple of years would tell you the same thing, the Boston tech sector is growing, fast. Yet detractors would point to the lack of money staying in Boston from VCs. If there is any validity to that argument, one thing is starting to become evident, that trend seems to be changing.

Calcanis also asked Warner about other angel investors in Boston, with the implication that Calacanis felt that there weren't enough active angels, another perception problem. For a while, Boston angels investors would keep a lot of anonymity, in most cases, for some pretty good reasons.

I spoke to one company last month who mentioned that their investors were adamant about not being named,. While its understandable that some angels have other priorities (ie. their own businesses or investment portfolios in other sectors) and don't want to be flooded with a whole bunch of unwanted pitches, the founder I spoke to also commented on how having an unnamed investor can be a "plus and a minus". For instance, if the person who an angel investor in a company has a certain gravitas or celebrity to add, that can be a make or break for a startup's visibility. (Think of Mark Cuban and his investments or the recent limelight shined on Panorama Education who has funding from Mark Zuckerberg.)

I know of one local investor and one company that play a vital role in Boston's tech ecosystem by funding local startups but have strict policies against being named as an investors.

Is one way to get more attention to have Boston angels get more involved in AngelList Syndicates as Calacanis prodded Warner to do during their TWiST talk? Should there be more people from some recent success stories (and those on the cusp of making it big) stepping up as angel investors?

There are already a few folks getting involved in the AngelList Syndicate program. In Boston, two of the biggest names, among a few, are Andy Palmer and David Chang. Palmer is asking for $25K to join his Syndicate and has one backer. Chang asks a minimum investment of $1000 (which is far more common) and doesn't have any backers yet. [David Chang tweeted an update to us on his involvement with AngelList Syndicates: "I played with @AngelList syndicates, but decided to use @Launch_Angels as a platform instead..." Launch Angels is a great, local crowd-funding alternative to AngelList Syndicates started by Shereen Shermak.]

People should be lining up to join these two savvy investors, yet no one, particularly folks in Boston, know that they are involved in AngelList.

Most definitely, if thought leaders like Warner, and even folks like Dharmesh Shah, Steve Papa, etc. got involved in the AngelList Syndicate thing, they would most certainly draw some backers. But that isn't what Boston may need most right now.

There is a growing trend of incubators/accelerators that are in almost stealth mode that offer what might eventually be a better alternative to standing at the masthead of something like an AngelList Syndicate.

Some sources have told us that there are key Boston tech figures who are not only backing companies in these incubator programs, but offering the on-the-ground mentorship that something like a funding syndicate can't. Among these incubators, we have heard from sources that some pretty interesting projects are being built under the guidance of folks such as Chuck Goldman, who just transitioned to a role at Great Hill Partners; Paul English, who is working on his project in the back of One Mighty Roar; and former Rue La La head Ben Fischman, whose possible incubator might be being built in the back of General Catalyst.

These are all great opportunities for Boston companies to make a big splash with some experienced guidance, a point that shines through listening to Warner's talk about his role in angel investing.

Although AngelList Syndicates may be one of the next big trends (look at how Tim Ferriss's Syndicate raised $2.1M for Shyp as an example of a success), and, there should be plenty of interest to join an investment syndicate led by the likes of Warner, Palmer, Chang, and even Shah, etc., Boston may be leading another revolution in how crowd-funding and the new laws of general solicitation work.

The next few months should be interesting as we get a clearer picture of what some of these stealthy projects look like. For now, why not get involved in the AngelList Syndicates of Palmer and Chang, and hope, that maybe someone like Dharmesh Shah starts one as well.

There is no reason why every one of these opportunities shouldn't be taken advantage of by the Boston startup community.

Dennis Keohane is a staff writer for VentureFizz. You can follow Dennis on Twitter (@DBKeohane) by clicking here.