Mack’s Apples and the AngelList Takeover

Apple TreeIt’s apple picking season in Londonderry, the New Hampshire Apple Capitol, home of Mack’s Apples.    If you haven’t tasted an apple fresh off the tree, you’ll discover a whole new species of fruit.  I had totally forgotten how immensely juicy and tasty and apple can be, and I’m a regularly consume large numbers of apples.

If at all possible, while the U-Pick is still open, come on up and see how easy and fun it is.  I stopped by the orchard on my way back from the vet’s to pick a peck.  Leta waited patiently in the car for the five minutes it took for me to return with my bounty.

Enough of apples, now on to the main event.  When I left you last week, we were discussing the New Age of advertising in private placements.  I had sited Tim Ferris and his syndicate.  True confessions:  I had totally underestimated the potential of these syndicates in both dollar amount and volume.

Two days later, I read a blog from Jason Calcanis, who had created his own syndicate.  Within a day or two, his syndicate grew to $250,000 per deal.  My guess is that if he chooses to let it remain open, Calcanis could grow his syndicate to a few million dollars per deal.  At the same time, Dave Morin of Path has opened up his own AngelList syndicate, which was growing at the same rate.

Which brings us to the potential disruption in the venture capital world.  Entrepreneurs, among others, have long talked with some disdain about venture capitalists:  egotistical, never return phone calls, more lucky than smart, power through the check book.  And for good reason.  As a group, they are a hard working bunch, but often they forget from whence they came.  An industry hazard.

If these syndicates gather steam, the venture capitalists will see angels encroaching upon their territory, and VC’s will be relegated to later rounds.  I can’t tell you how many times I’ve heard venture capitalists turn down a deal saying “We only invest in [Series] A [Preferred] rounds.  Maybe not so  much.

To date, the Angels have been both disruptors and enablers.  Disruptors when they take the place of VC’s and enablers when they seed a company prior to a venture capital round.

There are the skeptical VC’s, such as Mark Suster of UpFront Ventures, who talk about the heavy listing that VC’s do—OK, a lot of them do—claiming that most Angels aren’t prepared to play that role.

Plenty of food for thought.