Just got back from a great breakfast discussion between a group of young Boston VC’s and Angel investors.  We had a nice turnout and had a nice mix of folks who were are personal investors and/or parts of angel groups in Boston.  We were joined by Rob Adler, Chris Sheehan, Dave Balter, Dharmesh Shah, Jean Hammond and others.  Some highlights and observations:

1. It was interesting to hear where folks thought there was the most significant “capital gap” in the market.  Dharmesh suggested that it’s in true startup capital and that the friction there was still much too great.  Chris suggested that it was more in the $1M-$3M range, since it fells in between what angels do and what large VC’s find meaningful.

2. There conversation almost degenerated into a Boston vs. West coast discussion.  Thankfully, Andy Payne reeled us in 🙂

3. Pedigree came up as an issue with regards to consumer internet/digital media talent.  There is a shortage of alumni from great consumer internet companies starting something new. But it’s not just entrepreneurs – there aren’t as many angel investors that have had success with consumer companies with limited barriers to entry and IP.  Likewise, there is only a handful of VC’s with this same pedigree.  This isn’t a criticism at all though… just an observation of reality.  What to do in light of this is the big question.

4. There is a difference in investing professionally and investing out of passion and interest.  Angel groups by definition are somewhat professional, so there are a set of requirements that these folks have that are very similar to venture capitalists. They are effectively targeting a mid 30% IRR and are putting together a portfolio to achieve this. However, some members of these angel groups (ie: Dharmesh) also invest personally in a few companies purely out of interest and passion.  I think this behavior is what gives life to some high-potential, raw startups in the consumer space.  But the equation at this stage isn’t the same as professional investing.  I’ll probably elaborate on this in a future blog post.

All in all, it was a great event.  I was able to meet folks I haven’t met in the past, and it was an insightful discussion.  Hopefully the first of many like it.