I just read a post by Max Levchin called “On Ambition” that does a pretty good job at summing up something currently happening in the valley - the arms race between traditional venture capital and angel (and super angel) investors. Interestingly, I had just exchanged a few tweets about this very same thing with Dave McClure about the Techcrunch deal which was officially confirmed this afternoon (AOL acquisition between $20 and $45m).
The whole thing comes down to a few people thinking it’s weird that an entrepreneur wants an early paycheck instead of getting risky with an idea/product/startup. Sometimes it is weird. Sometimes, however, it is not. I know a bunch of people who would benefit tremendously from what is commonly called FU money. Not to save themselves or their personal lives, but to (who knows) become investors themselves, in the ideas of others.
You’re always going to find the two kinds of people. Those who want the quick buck and those willing to give their all, to double-down on their products and go the long way. This is where the whole discussion of exits should lie - are we funding idiots, or people who are truly passionate about their idea -, instead of whether small or big exits are the right thing to do. There’s never going to be a general rule for exits: some will be huge, some will be small. Lets get back to talking about passionate entrepreneurs. Size doesn’t matter (much).
Update: Actually, I just found something by Dave McClure you should probably see instead of reading whatever the hell I have to say. Here: