Angel investors say no for a number of reasons. Either the investor does not understand the entrepreneur’s goals, or perhaps each has different priorities and ambitions. Perhaps the presentation made on behalf of the firm fell flat, or perhaps the investor felt that the firm’s management team left much to be desired.
However, the reason why Kevin Hartz, the CEO of cloud-based ticketing agency EventBrite has decided to take a break from investing is because of the glut of money changing hands between investors or entrepreneurs throughout Silicon Valley.
Although Hartz has been following on with a number of the startups to which he allocated funds, the last company in which he invested was Pinterest, an image-based, noticeboard-styled social media site. He also was an early backer of PayPal and numerous other companies, among them Airbnb, Flixster, Palantir, Trulia and Yammer.
Instead, Hartz will be frugally investing his money in his own company, EventBrite in the interest of protecting his assets should the startup market suddenly crash. Although the proliferation of viable startups has begun to create a sustainable reciprocity within the market, Hartz is not quite so optimistic.
“We don’t know where we are in this cycle,” remarks Hartz. “We can’t know how much longer this abundance of capital will last, but I don’t want to be a part of it. When I see a massive number of new investors and carpetbaggers coming in, it’s time to get out.”
Hartz then discusses the glut of Billboards along the San Francisco Peninsula advertising new startups, which are proliferating at a rapid rate, the overambitious and over-competitive behavior on the part of the saucy young upstarts founding the startups, and an increasing presence of knock-offs produced by companies copying and recycling formerly innovative ideas and products.
“Everyone is competing for the same people, going after the same real estate, the same support services,” he says. “The natural resources of the startup world are getting scarcer and scarcer, and the cost is getting higher and higher. It’s all an outgrowth of an abundance of capital… That relentless competition coupled with the cash tends to train entrepreneurs to be far more aggressive and less focused on things like measurable results.”
However, Hartz’s decision to focus on nurturing Eventbrite to a path of steady growth owes to his desire to preserve his resources so that he can still be able to invest in companies if and when the market spontaneously takes a turn for the worse. “When things are most dire, and people are most scared, and when people openly mock the consumer internet space and the excesses of it, that’s when I will start investing again.”