Entrepreneur and angel investor Jason Calacanis last week followed through with his promise and started a new angel network after failing in his campaign to get several other angel networks to drop their fees.
Calacanis had singled out several angel groups—including the
He threatened to target them for “elimination” with “competing, fee-free events directly opposite your events,” which investors would be encouraged to boycott, if they didn’t drop their fees by Nov. 16.
Several of the groups ignored Calacanis while others have said that their fees provided value to entrepreneurs, by paying for mentoring and other services.
Nevertheless, Calacanis last week started a for-profit group, called the
Late last week, Calacanis announced that the group signed on its first batch of angel investors: Kevin Rose, co-founder of social-bookmarking website Digg; William Woodward, founder and managing director of
Calacanis—who’s CEO of Mahalo.com, a human powered search engine that he founded in 2007—said that his group will be “built in public” and will be discussed in more detail in this week’s installment of his webcast, “This Week In Startups,” where viewers will vote on the group’s logo.
In the meantime, the group also has its own Facebook fan page and Twitter users can track it with the hash tag #oaf.
“I asked folks to make a logo and dozens have responded…for free!” he said in an e-mail to PE Week.
Other details, so far, are scarce. Calacanis declines to say how the group is going to be organized or how he plans to make money.
“Money does not drive me — giri does,” says Calacanis, referring to the Japanese notion of duty or obligation.
“My goal is to give back to the entrepreneurs who are coming up in the game since the game has given so much to me,” he says.
Calacanis calls the angel groups he’s targeting “rats on a sinking ship. They only thing they are going to do is run,” and predicts the Keiretsu Forum, in particular, will soon be out of business.
Keiretsu members defend the forum, which they said has invested about $200 million in 185 companies over the past nine years. Judith Iglehart, international vice president of Keiretsu, says that fees vary by region from zero to $6,000, depending on the country, regulatory restriction and membership in attendance. She adds that members volunteer hours of their time to help entrepreneurs.
“Members want to see companies with a disruptive technology, defensible IP, a chance for success, and an exit plan so their investments are returned,” she said in a written statement. “There are tough questions from members, but entrepreneurs are asking them for their personal funds and the members have the right to determine if they have a chance of getting a return on investment. Because Keiretsu is not a broker/dealer, all investments are handled by a team of members and that process can take from 2-14 weeks depending on the due diligence process.”
The angel investment group—which is named after a Japanese term describing a loose conglomeration of companies organized around a single task—also questions whether Calacanis has the experience to build an angel organization.
But Keiretsu also is making an effort to avoid controversy. Founder Randy Williams says that his group “enjoys working in the spirit of collaboration and cooperation with other angel groups. We always welcome new angel organizations to the community of angel investing.”
Similarly, Keiretsu’s Steve Bell—who Calacanis interviewed a few weeks ago on his weekly webcast while Calacanis brandished a plastic gun—says he wishes Calacanis the “sincere best of luck!”
In a comment on Calacanis’ blog, Bell also offers to release, free-of-charge, the OpenAngel.net/org domains he bought out from under Calacanis four weeks ago as a prank.
Although angels and institutional VC firms invested less money last year, investments by angels dropped more as the personal wealth of individuals was hammered by the stock market decline. But the number of deals funded by angels rose, and they participated in more than 14 times the number of deals as VCs,
In 2008, angels invested $19.2 billion in 55,480 deals, a 26.2% drop in dollars compared to the year before, but a 2.9% increase in the number deals, according to the University of New Hampshire’s Center for Venture Research.
Investments by venture capitalists, however, dropped in dollar amount and the number of deals. VCs in 2008 invested $28.3 billion in 3,808 deals, a year over year decline of 8% and 4%, respectively, according to the National Venture Capital Association, based on data from Thomson Reuters (publisher of PE Week).
One challenge for entrepreneurs, says John Dilts, who left the Keiretsu Forum three years ago to found Thousand Oaks, Calif.-based Maverick Angels, is that angels are fragmented and most angel groups are run by volunteers.