Some Angel and VC investors are averse to cold water

Silicon-DragonThis past Monday evening I attended my fourth NYC Silicon Dragon event hosted by Rebecca Fannin of Silicon Dragon.  Rebecca (author of the 2011 book Start-up Asia ) always puts together an interesting program and she conducts these programs all over the globe but primarily in the U.S. and in Asia.

This was by far the most well-attended event (and well-run too) in NYC that I have attended and the venue – at NASDAQ is perfectly appropriate for the subject matter – what’s happening in the startup world in Asia and the United States (primarily).  Panelists and speakers from China and the U.S.; as well as Israel and Hong Kong offered opinions on the general state of the tech and startup investing environment.

Some of the panelists and speakers:

DEALMAKER PANEL
Jim Robinson, Co-founder/Managing Partner, RRE Ventures
Alessandro Piol, Partner & Co-founder, Alphaprime Ventures
Nihal Mehta, Founding General Partner, Eniac Ventures
Claudia Iannazzo, Partner, Pereg Ventures
Brian Cohen, Chairman, NY Angels
Annemarie Tierney, VP, Head of Strategy and New Markets, NASDAQ
Moderator: Rebecca Fannin, Silicon Dragon / Forbes

INNOVATION SPOTLIGHT: DIGITAL CURRENCIES
Francesco Rulli, Founder, BitLanders & BitCharities
Sarah Martin, VP, Digital Currency Council
Tatiana Moroz, Founder, Crypto Media Hub
Alan Yong, Founder, DNotes
Moderator: Porter Bibb, Managing Partner, MediaTech Capital Partners

TECH CHATS WITH UP AND COMING CHINA-CONNECTED ENTREPRENEURS
Mark Hookey, CEO, DemystData
Ronald Li, Founder, Novoheart
Ding Ding, Founder, Saywhatyo.com

HIGHLIGHT
Mobile photos of Beijing lifestyles and culture taken through the lens of China tech guru Frank Yu

I enjoyed the straightforward style of Brian Cohen (co-author What every Angel Investor Wants you to know) and Jim Robinson (who I’ve met before), as well as Alessandro Piol (co-author of the 2013 book Tech and the City), Claudia Iannazzo, Annemarie Tierney and Nihal Mehta.   It was mentioned (out loud!) that most angel investors do not make money on their investments.  In fact more than most – nearly all angel investors invest in companies that ultimately are unsuccessful.

So why do Angels invest?  Besides having the money to do it (“Stupid money” as Brian Cohen mentioned on multiple occasions), Angel investors have belief, ego and desire, (my words not theirs, and not necessarily in that order).

In prior posts on this blog I have cataloged my own work with Chinese companies and the main reasons why that work has not been sustained.  To top off my own experiences many of the panelists noted that the market within China is so large, and yet still untapped to a great degree (think Tier 2,3 and 4 Chinese cities for unrealized opportunity), that there’s less and less reason for Chinese companies to make efforts to do business in the U.S. or other western countries.

When I started on my own path 6 years ago that was not even a consideration.  Things change fast in the world of global commerce and that pace is not slowing down anytime soon.  India is still in its own early stage of having a majority of its citizens using smartphones.   And for that matter there still are another 600+ million Chinese who have yet to come online.

Having little infrastructure to replace (unlike the U.S.) India (and China for that matter) will skip steps in the economic development chain that more established economies have had to endure.

The possibilities are intoxicating and the energy in the room was palpable.  Until the very end, when Brian Cohen pointed out an industry legend in the audience – Harry Edelson of Edelson Technology Partners  who per Mr. Cohen was there at the outset of the VC industry as someone to be respected and admired.  Shortly thereafter in a brief Q & A Mr. Edelson raised his hand to make a point.

The point he made was that many of the panelists were smart, earnest and honest. They discussed the upsides and downsides of investing.  But in Mr. Edelson’s opinion they were all talking about a bull market that would be eventually followed by a market correction.  There had even been a mention by Jim Robinson that a correction of maybe as much as 20% is in the not-too-distant future (my sense was 2 years or less overall).  But none of the panelists/investors mentioned a bear market which Mr. Edelson advanced was inevitable and the risks therein should be highlighted to a much greater degree than he had heard that evening.  “What goes up still must come down”.

For ten seconds you could have heard a pin drop.  It was a delicious few moments.  It reminded me of former Fed Chairman Alan Greenspan’s “Irrational Exuberence” speech back in 1996.  And we all know how that turned out.

The program resumed and was completed shortly thereafter but the residue of the cold water that was splashed on all of us remained.  To be clear this is an extremely exciting time in the world of startups, investment capital and new ideas.  I am no less excited from having attended – in fact I am even more excited as a result.  But I still have a little taste of that cold water in my mouth and I think that may be a very good thing.

 

About markkolier

Futurist, entrepreneur, left lane driver
This entry was posted in Angel Investing, Business in Asia, Business in China, Innovation, International business, Start ups, Venture Capital and tagged , , , , , , , , , , , , , . Bookmark the permalink.

4 Responses to Some Angel and VC investors are averse to cold water

  1. Tom says:

    Great post, thanks. Some lessons have to be learned over, time and time again.
    When the bubble burst and the liquidity disappears (not only in China), those that have preserved their capital and have cash to put to work will reap the greater return.

    Like

  2. Jan says:

    It seems that Harry Edelson predicted correctly!

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s