Angel investing

Posted on Updated on

No matter how genius your idea is, or how lucrative it’s potential, success will never be measured as a function of labor. How could it? How do you measure the labor investment of a good idea? Watts? Joules? Calories, British Thermal Units? Do you count the man hours spent at the cocktail/beer/pizza/video game party that generated the good idea?

The point of the Capitalist system is to make it possible for you to bring your idea to profitable fruition. But before that happens you are a drain on society. It’s true. You wear clothes you didn’t make. You eat food you didn’t grow and live in a house you didn’t make. You are a parasite. This is how we all start out. As the ultimate users.

In order for you to be successful you need someone else’s money. Often it’s a bank but, generally, in the case of start ups, it’s an angel investor, one of the flavors of venture capitalism. Someone will come by and shower you with millions of dollars on the hope you become profitable.

So congratulations. You got your seed money. Now you’d better run. Run like never before because you’ve officially began your cash burn. You will burn that cash until it’s gone. Hopefully by the time it disappears you’ve turned a profit and your company has a life of its own. It’s become self-sustaining and productive.

So why did the angel invest with you? Was it altruism or philanthropy? No. And we don’t pretend it was such. It was a cold-hearted and cynical ploy dedicated to obtain wealth. And we’re glad they did it too.

Giving someone the resources they need to succeed is not about “fairness” or “justice” or “compassion”. It’s not something people do because they are moved by plight or circumstance, or because they want to make the world a better place. They do it, in the case of business, because of enlightened self interest.

It’s easy to think of the poor as users and losers. Sometimes that’s fair. Sometimes it isn’t. The point is that it doesn’t matter. Everyone starts out as a parasite, even if it’s just you attached to the uterine lining of your mothers womb draining her physical resources. The concept of the angel investor goes to giving to others based on profit motive. When we think politics or social policy the profit motive is still there but it’s less direct. Some folks never get their angel. The never get to a place of self-sustaining profitability. However it would be the height of arrogance just to castigate others for what we see as their failings rather than as an investment opportunity. It’s why we take the high road and the long view. Because wealth creation can’t happen without it. Unless you can create a self sustaining and profitable individual it represents a net loss for our society as unrealized gain.

Think of it this way. Wealth is built from being building things. Houses, cars, bits of code, whatever. If you have a large group of people failing to live up to their economic potential then we lose out on capturing a part of the wealth they generate. This is how civilization works. People working together for mutual benefit and enlightened self interest. The real world however has created a maldistribution of resources that is ultimately self-limiting unless we can shatter the bottle necks. In that sense we’ll need an angel investor. Lots.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s