Source: The Business Insider, Nov 2010
There are four distinct bubbles right now:
1. The Angel Bubble (huge)
2. The Talent Bubble (unprecedented)
3. The Incubator Bubble (large)
4. The Stock Market Bubble (modest)
1. The Angel Bubble
Ten short months ago, the valuations at Open Angel Forum were in the $1-3M “pre-money” range. In October and November valuations for angel deals at the Forum, and that I’ve seen personally, were in the $3-6M pre-money valuation range.
In fact, almost all of the angel investments I was excited to do in the last three months gave me the new angel standard, “We’re thinking a $6M pre.”
Part of the reason for the angel bubble is that events like incubator demo days and servies like Angel List (and, yes, even Open Angel Forum — guilty as charged!) have made the process of finding and pitching angels transparent, free and merit-based.
2. Talent Bubble
Venture capitalist Fred Wilson blogged that things like Google paying a reported $3.5M to retain a single developer headed to Facebook were signs of an unsustainable environment.
3. The Incubator Bubble
Given the four bubbles, here is some advice:
a) Close Your Angel Round
If you’re raising an angel round and can get anything above a $2M pre-money valuation, you should immediately raise money because my gut tells me these large angel valuations are going to end after the holidays.