Here's the question that article didn't answer: If I'm currently bootstrapping a startup, with no current connections or previous successful exits, straight out of college without connections at a past employer, and I'm not in a program like YC...
How do I start raising this round? Where do I find these superangels? Cold call/email investors? Present at conferences?
http://angel.co -- if you get through that filter, it's a (pretty good) proxy for your chances at currently raising a round. And if you don't get through that, you'll know there's more work to do before being able to raise a party round.
I think they could be bad if the initial terms overvalue the company and follow-on rounds dilute the seed investors in a down round, or if the initial investors invest at such a high valuation that you can't even get other angels interested.
The angel investor is negotiating the best deal for themselves, but they are also negotiating at a valuation which will be appealing to follow-on rounds.
It is my understanding that if you overvalue your company at the early stage, you could do significant harm to either your ability to raise capital later and/or the investors of the seed round.
Also, the title says it 'how to get a crazy valuation', why does crazy == good??
Good points there. It seems like a more entrepreneur-friendly system, but who ever is in control needs to stay sane. Temptation for overvalue and other excesses is there regardless of who's at the helm.
1. If they take more time -- since there is no lead investor to drag other investors in, the entrepreneur has to do that work. I don't know how this works out; it's certainly easier to convince someone to invest a small amount where they know they won't have to be the lead investor.
2. If they take too much money, and feel they need to increase their burn rate because of how much they have in the bank.
3. There isn't a lead for the entrepreneur to go to to discuss decisions -- "So if e.g. the entrepreneur wants to sell the business, she may often discuss it with the lead investor rather then having to tie in to all investors."
4. If the valuation is too high, the investors will want a higher exit to get their money back.
5. If no one gets on your board, you may not be able to get the advice you need.
I don't know how accurate those points are, but each seems possible to me. I've never been involved in a startup, so take them with large grains of salt.
How do I start raising this round? Where do I find these superangels? Cold call/email investors? Present at conferences?