Andy Bromberg - Startup Investor School Day 4 | Summary and Q&A

TL;DR

This content explores the evolution of early stage fundraising, including angel investing, venture capital, and the rise of ICOs, discussing trends and challenges in the industry.

Key Insights

• 🏦 Taxes: Taxes are an interesting issue when it comes to angel investing, and it can be a complicated and time-consuming process to navigate. Qualified small business or section 1202 can have a significant impact on potential tax liability, so it's worth investigating.
• 💰 Making Money: Angel investors are primarily driven by the desire to make money, even if they also care about making a positive impact on the world. Investing in billion-dollar companies can provide more fuel for making a difference.
• 🤝 Network Importance: Building a strong network in the angel investing world is incredibly valuable, as it can lead to helpful connections and opportunities. Building personal brand, like Page Maan, can make investors more attractive to have on a cap table.
• 📈 Professionalism in Investing: While many angel investors may be amateurs or dabblers, it's important to approach investing professionally and thoughtfully. Portfolio construction, asset allocation, and paying attention to what goes right and wrong are crucial for success.
• 👥 Brilliant Founders in Big Markets: The key to a successful investment is finding brilliant founders with innovative ideas in large markets. The aphorism "brilliant founders in big markets with ideas that seem bad" highlights this point.
• 🌍 Global Impact: The trend of ICOs and token fundraising is a global phenomenon, with money being raised in Europe, the US, and beyond. It offers the potential for widespread participation in early-stage investing.
• 💧 Trend Towards Liquidity: The trend in recent years has been towards faster liquidity, driven by ICOs and the ability to trade tokens. However, there are pros and cons to this trend, as early liquidity can affect long-term company support.
• 👥 Importance of History: Understanding the history of venture capital and early-stage investing is crucial for predicting future trends and staying ahead of the curve. Lessons from past trends, such as decreasing costs to start companies, can inform future decisions.

Transcript

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Questions & Answers

Q: What are some similarities between traditional angel investing and ICOs in terms of their fundraising models?

Both traditional angel investing and ICOs involve raising capital from individual investors, albeit in different forms (equity vs. tokens). Additionally, both models typically involve early-stage companies seeking funding to launch or grow their ventures.

Q: What role do regulations play in shaping the ICO market?

Regulations have a significant impact on the ICO market, as they determine how companies can legally raise capital and sell tokens. The industry is evolving, and policymakers are increasingly working to create frameworks to navigate the complex legal landscape surrounding ICOs.

Q: How do tokens differ from traditional equity in terms of owning a stake in a company?

Tokens represent ownership or participation in a network, rather than traditional equity in a company. Owning tokens grants individuals certain rights and benefits within the network, which can include access to services, voting power, or potential financial returns. Tokens are often associated with decentralization and disintermediation, as opposed to traditional equity ownership and governance structures.

Q: Will we see a shift towards longer liquidity timelines in the ICO market, similar to traditional startup equity?

It is possible that we will see a shift towards longer liquidity timelines in the ICO market to ensure investor support throughout the lifecycle of a company. Early liquidity can lead to premature exits and potentially hinder a company's ability to weather downturns or fully develop its network. However, given the current market conditions, early liquidity is still prevalent in many ICOs.

Summary & Key Takeaways

• Early stage fundraising has gone through several stages, from traditional angel investing to venture capital and the emergence of ICOs.

• Trends in the industry include decreasing costs to start companies, decreasing costs to invest, and the constant push towards liquidity.

• The future of early stage fundraising will likely involve faster and cheaper company launches, increased accessibility for investors, and continued development of the ICO market.