As Angel Investors Pull Back, Valuations Take a Hit
As an angel investor, I can anecdotally confirm that I&#x27;ve become more cautious recently (in the last year, really). However, I&#x27;m not at all concerned about the stock market. That has never influenced my decision to fund a company. My belief is that a strong company can weather a bear market.<p>I&#x27;m concerned with the current state of valuations - I enjoy giving investments to companies on the order of five figures or so each with the hope that they make something meaningfully impactful. I don&#x27;t necessarily look for them to become moonshot successful; a win can be much smaller than that. Developing incrementally impressive technology that effects change is also a win.<p>But valuations are so frothy right now that it&#x27;s difficult to tell the strong companies from the ones that won&#x27;t survive &quot;when the tide goes out.&quot; It all seems very clear in hindsight, but it&#x27;s hard to know right now, even moreso than usual. This is always very difficult, but the market for ideas has become somewhat &quot;congested.&quot;<p>There has been a flood of folks entering the &quot;startup game&quot; who seem to be planning for their IPO before they&#x27;ve even gotten a product off the ground. Again, anecdotally, I&#x27;m observing a noticeable increase in fraud among founders who are trying to raise money unscrupulously, especially with novice investors.<p>I don&#x27;t like to use the word bubble because I think it&#x27;s lazy analysis, but I do strongly believe valuations are in the beginning of a market correction. At the very least, I think there will be a higher bar for invested money to indicate a legitimate valuation instead of a loan.<p>I do think that there will still be plenty of capital ready to be given to companies, investors are just going to be more selective (read: cautious) about it, which may very well change the growth and success potential of certain more dubious business models in the valley.