Today at our TechCrunch Disrupt conference in San Francisco, there was probably one panel above all others that everyone was waiting for: Super Angels To Super VCs. The reason, of course, is that last week the situation known as “AngelGate” broke out. It started with Mike walking into a closed-door meeting at a bar. And it ended with heated emails being published. We said Disrupt would not be about AngelGate, but naturally, it had to come up.
The panel consisted of: Ron Conway (SV Angel), Chris Sacca (Lowercase Capital), Dave McClure (500 Startups) — all of whom were right in the middle of AngelGate — and Roelof Botha (Sequoia), Chris Dixon (Founder Collective), Mark Suster (GRP Partners), and Yossi Vardi.
Not surprisingly, Mike (who was moderating) kicked things off by bringing up AngelGate right off the bat. He specifically asked those on the stage who were there to comment on it. McClure said that he’s said all he wants to say on his blog. Sacca took a moment to commend Conway for all he’s done for the angels, and just truly believes there was an understanding about the meetings.
That said, Sacca noted that he wasn’t at the second dinner, so he hopes no one “fucked that up.” “I think this whole thing is a total waste of time,” Sacca concluded. Conway said that he thinks all the leaked emails cover his feelings on the topic.
But they weren’t quite done talking about it.
McClure (who was wearing a Bin38 — the venue where the angel meeting took place — joke shirt) said that if there was anything good to come out of this, it was how impressive information sharing on the various social networks we use now. Specifically, he noted that Facebook, Twitter, Quora (and even TechCrunch) were great at getting this information out there and fostering discussion.
Sacca agreed that Quora did a great job on AngelGate. He noted the great jokes about Bin38 that people put up. McClure also noted that the Hitler video (a spoof, obviously) was genius.
The discussion then moved on to the different between VCs and “Super Angels” — but the AngelGate tension didn’t stop. There was noticeable tension between McClure and Conway at multiple times, for example. There was also tension between Sacca and Mike. Yossi Vardi would try to ease the tension with his trademark humor, but it wasn’t fully working.
So much for TechCrunch Disrupt not being about AngelGate.
Continuing live coverage can be found at our day one omnibus post. Don’t forget to tag your disrupt-related posts and media with #tcdisrupt!
More: Super Angels: Like Making Love To A Lover. VCs: Like Making Love To The Government.
Below, find my live notes from the panel (paraphrased):
MA: You guys may have heard of AngelGate. I promised this wouldn’t be about it. But I have to ask…
DM: I’ve said everything I want to say about it on my blog.
CS: Ron made this industry possible. I think there was a misunderstanding. I wasn’t at the second dinner, so I hope no one fucked that up. But I was at the first, it wasn’t bad. I think this whole thing is a total waste of time.
RC: I think all the leaked emails cover it.
MA: So we’re not going to have a Jerry Springer moment.
CS: I don’t think you want that.
YV: I’m more concerned about this all getting nuclear.
(McClure is wearing a Bin38 shirt.)
DM: The amount of social media going on about all this was actually pretty cool. TechCrunch, Facebook, Twitter, Quora — it was cool watching everything develop in realtime.
CS: Quora had a good list of jokes, actually.
DM: Last point, the Hitler video was genius.
MA: What’s the difference between a VC and super angel?
RB: We don’t really think about everything being different. It’s all about the value proposition. It’s about what we offer the founders.
MA: Is there any different between the huge amount that some angel raises?
RB: I don’t think there’s a difference, really.
DM: Yeah but the targets are different. Huge guys are looking for billion dollar exists. We’re looking for $50 million exits still.
MA: Average size you guys invest?
RC: $50 – $100K
CS: $75 – 300K
MA: What’s your smallest funding?
RB: $0. Seriously. Some companies aren’t quite ready for funding yet, but we still work with them. Some we don’t put any money in.
YV: The different between super angel and a VC is like making love with a lover versus making love with the government. The angels are much more accommodating to the founders.
MA: Is it okay for you to sell stock early before some kind of exit? Some people do it, and it pissed people off.
DM: Not in the first round, but later yes.
MA: What about founders taking money off the table?
RC: I think a company consists of every single person on the team. Facebook has 2,000, Zynga has 1,200, startups have 10. Everyone should cash-out at the same time.
DM: But that’s just impractical. Sometimes there are offers on the table that are too good to pass up — if people don’t want to sell, why not let them take money off the table?
YV: Young founders should be allowed to get some money.
RC: The rank-and-file engineer has the right to get liquidity at the same time as founders.
CD: I’m against liquidity events unless the company is profitable.
RB: Founders should be allowed to take “feed the family” money off the table.
DM: Big VCs are getting squeezed out unless they offer founder liquidity.
MA: Let’s talk about valuations. They’re going up, I hear. What do you guys do counter?
DM: We’d have to go to dinner first (laughs).
CS: We’ve slowed down — just not doing as many deals.
CD: We’ve done 15 investments in the last few months and I haven’t seen any of them being huge. We need to make sure they can raise VC later.
DM: It’s all about the exit you’re aiming for.
MA: But why should the entrepreneur care?
DM: It may seem fine that they’re looking for a big valuation, but it can hurt them.
MA: Shouldn’t all these guys be going to change the world?
DM: No, absolutely not. It’s about being realistic.
MS: If you raise a large round too early, you don’t have a chance to get out. We sat on the sidelines when valuations got way too high a few years ago.
MA: Ron what do you think about it being okay to be a $25 million company?
RC: We invest, then the entrepreneur decides. The investors don’t decide that.
MA: Do people say they want a small exit with Google? Or Facebook?
RC: Sometimes they say that, and we weigh those things. But a great entrepreneur doesn’t talk about those things.
CS: People get rich at $20 million exits. People have braces as $4 million each.
YV: It’s all about risks.
MA: In the last 18 months Sequoia has exited something like $12 billion. That has to be more than super angels right?
DM: For sure. They had a great model, but in the future it’s going to be different. It’s not a bad thing to be building a small mousetrap.
RC: I think Super Angels versus VCs is a bunch of confusion. Super Angels are just small VCs.
DM: That’s absolutely not true. We have designers on staff.
RC: Can I finish?
DM: Sure.
RC: Many of the super angels have the same backers as big VCs. Litte VCs are now called Super Angels. What matter is the partners in these firms. It should be all about the entrepreneurs and what they want. All these names are bullshit.
MA: What we need are $10 billion companies in SV. Isn’t that true?
DM: But if you ask companies some like these smaller ideals.
MA: No one is talking about the entreprenuers.
CS: That’s not true. You call some smaller companies “dipshit” companies, but they’re not.
YV: Not all super angels are funded angels. Some of us are doing it with our own money.
RC: You’re right.
That’s a wrap.