Tuesday, March 1, 2011

AngelList: HotOrNot For Startups

After seeing about 20 tweets talking about 'angellist', I couldn't help but look. For a moment I thought it was yet another fallout from angelgate that I wrote about last year. It sounded like a leaked document outlining shady angel investment practices...

Got Killer Idea But No Seed Money?
AngelList Might Get You The Other Wing You Need...
In reality it was not. AngelList is a craigslist-like service for startups, but with a touch of crowd sourcing. In Hollywood executive pitch, I would call it HotOrNot for startups; connecting entrepreneurs with angel investors.

That seemed straight forward, but there have been lots of tweets about what we might be losing and what we might be gaining because of AngelList. Some praised it as break-through in venture funding (as Dave McClure wrote on his 500 Startup blog) while others cautioned the indiscriminate use of it citing increasing signs of overblown hightech startup bubble (as Mark Suster wrote on TechCrunch).

Which is it? Is AngelList a boon to angel investment and startup community or a failed experiment because of decreasing signal-to-noise ratio?

Well, only time will tell the truth. I happen to think that both Dave and Mark have a valid point in their argument. I share Dave's point of angel investor's advantage if the angel has domain-specific knowledge; I also agree that Mark's observation that we are all getting a bit high from Facebook, Groupon, Zynga and Twitter's valuation. It certainly looks like AngelList will accelerate these two phenomena even further if anything.

And that is good news for those of us who follow social network. As more and more domain-specific social networks get launched, the true value of social network will come into focus: communication.

Unless social network maintains connections and reinforces quality communication among members, it will suffer the fate of yesteryear's champion social networks, MySpace, AOL and Cyworld. Part of this will be maintaining high signal-to-noise ratio, and part of this will be making it attractive for high-value users to remain active in the system. This will be a challenge for all social networks.

One thing is clearly going for us, however. Like I predicted back in January 2011, there will be no shortage of new social networks for us to try, such as AngelList.

No comments:

Post a Comment