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Do You Know
What an Angel
Investor Is?

Do You Know
What an Angel
Investor Is?

      Business Insider has a story about entrepreneur Nikki Durbin, 22-year old founder of 99dresses.com. The story reports that as a woman she felt she wasn’t always taken seriously in the start-up world. The story gives two examples to back that point.

      Durkin said an investor at a fundraising event asked her if she knew what an angel was. Durkin said to Business Insider, “I just remember thinking, I’m at this event of course I know what an angel is. I just found it really odd, and I don’t know if he would say the same thing if a guy was talking to him.”

      That DOES sound condescending, if not downright sexist.

      But of course it is out of context.

      Here’s some context.

      I have a degree in economics, an MBA from Berkeley, and over 30 years of business experience. Do you know what question I hear in Silicon Valley nearly every time I meet with potential investors for CalendarTree?

      “Do you know what an angel investor is?”

      The first time I heard the question I thought That is terribly condescending. This person knows my background. OF COURSE I know what an angel investor is.

      Then I found out I didn’t know what an angel is. The definition has evolved.

      The old definition of an angel was an investor who made high-risk investments in start-ups that had not yet demonstrated organic, viral growth. That sort of investor no longer exists, as far as I can tell. Maybe it never did.

      Today an angel investor is, for all practical purposes, a bank that looks at virality instead of cash flow. If your start-up is already growing quickly, at least in terms of users and clicks, an angel will be happy to fund you to even faster growth. But if all you have is a great idea and beta product, no angel is interested. Nor should they be, because it is well-accepted that no one can pick an early stage winner in the start-up space.

      The investors who do put money into unproven start-ups are typically friends and family. Silicon Valley lore says there are such things as seed investors that invest in the unproven start-ups of strangers, but I have not yet met such a person. Nor have I heard the name of such a person. It is a bit of a Bigfoot situation.

      Today, an angel investor is similar to a venture capitalist, with the only distinction being that the latter invest higher dollar amounts. Otherwise they are the same thing. Angels and VCs prefer to invest exclusively in businesses that are already growing quickly. In the world of the Internet, fast growth is assumed to be something that can be monetized in the future.

      Business Insider gives another example of the patronizing attitude that Nikki Durbin experienced. At a networking event – where math skills are high and social skills are low – a man asked if she had modeled. The article is accompanied by a photo of Durbin in a stylish outfit, posing like a model.

      I don’t doubt that Silicon Valley’s male-oriented culture is hard for women to penetrate. But I do question whether it is worse than any other business environment. If I had to guess, I’d say Silicon Valley would be among the easiest for women to penetrate because the average age for start-ups is younger, and most start-ups would strongly prefer hiring additional women. Or even one woman. The problem from their perspective is supply.

      Scott Adams
      Co-founder of CalendarTree.com

      Author of this book


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