Sebastian Mallaby: prediction

Transcript context

…When is venture capital more effective versus when is angel investing more effective? Angel investing wasn’t really a factor until the mid-late 1990s. Once it became a factor — and that happened because Silicon Valley had reached a point of maturity, where there were enough rich, exited entrepreneurs who had made money starting their own companies, and then wanted to turn around and fund some younger people who looked a bit like them. That’s what happened with Google. Google could raise $1 million in 1998 before going to any venture capitalists because angels had become a thing. One of them was Jeff Bezos of Amazon, and the other was Andy Bechtolsheim, who had started Sun Microsystems some time before. Once you get angels, then I think entrepreneurs are going to want to use them because they’re friendly, they’re typically people who know a lot technically and that you relate to, you look up to when you’re a founder. I think angels are useful for the first round of money, the first amount of mentoring. Then when you get a bit further along on your company, you want the Series A, which means more money, more formal company structuring, and a tougher, clearer sense of what your next milestone is that you have to reach — otherwise, you’ll be shut down — then you go to the proper VC. True or false, good CEOs make good VCs.…

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