andrew_null

love

Verbose = fitting for announcing news about a newsletter startup, no? :)

hey! This is andrew from a16z -- substack is still relatively new (~2 years) and the product is solving a real problem for writers. The numbers are already strong, but think about where it might be over the next 5-10 years. I think your calculation focuses too much on where it is now versus where it might go in the future

Android has a couple of these things.

OP here. This was published Aug 15, 2012.

You're being pedantic. I'm not saying that literally no dating products are getting funded - in fact, I'm an advisor to CoffeeMeetsBagel which is on that list. Just that there's major resistance (which that article talks about) and there isn't very much funding for the category compared to a "hot" category like SaaS/on-demand/messaging, etc. My point is that it's an uphill battle, and I gave the reasons why for investors are skeptical.

I actually specifically talk about CAC and LTV and why enterprise/SaaS can drive higher revenues over time. There's a whole section for it.

google is your friend.

Unfortunately there's some morality clauses in many investment funds that keep them from investing in something like that. Same class as porn, gambling, etc. Might be great for an individual investor though.

that's one data point. Not saying it never happens, and in fact, Dating Ring raised $500k or so. But here's a lot more commentary on the topic: https://www.cbinsights.com/blog/dating-startup-venture-capit...

Thanks. I did totally botch the math, I typed this up in one go and mixed up the formula, thanks for pointing it out. Updated to be more accurate.

OP here. You're right, I'll update for math.

There's a few points which sound right in this essay, but I'm surprised he didn't discuss the more technical definition and its impact on the ecosystem:

1) an angel investor is someone who invests their own money 2) a venture capitalist invests out of a fund, which is mostly other peoples' money (OPM!) while taking a fee + economics from the fund (the famous "2 and 20" model)

But that's not too useful, because what's important are the behaviors that come out of the situation.

Because most angels are investing their own money, they usually don't have crazy amounts of capital to work with. Thus, they usually invest early so they can get a better percentage at a lower valuation.

Many VCs also invest early, sometimes exclusively so with smaller funds, but they are often called "seed funds" to make that distinction. A fund which invests OPM is never called an "angel" regardless of what stage they invest at.

And finally, big funds (managing 100s of millions of dollars) are what we think of usually as venture capital.

(Funds that invest even larger amounts at higher valuations are often referred to as "late stage venture capital" or "growth capital." And there's more specialized terminology later stage since more specialized financial instruments can be brought into play - SPVs/debt/mezzanine/etc)

Where Scott's essay rings true is that idea that investors of all classes are more risk averse these days- they prefer to see traction since the cost of building an app/website is rapidly decreasing. Thus, they are all behaviorally acting like "traction investors" rather than "idea investors" whereas in the past, traction investors purely consisted of the growth capital guys.

This might be worse for the ecosystem since people want you to have everything built before taking in our first dollar of investment, but you could argue it means the ecosystem's $s are being allocated more efficiently also.