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The current issue of Business Week Magazine lists the Top Angels in Tech. BW presents this as the first annual ranking of top angel investors. The sub story is the impact that current and former Google employees are having as angel investors.

BW’s list illustrates several of our themes of innovation with respect to the importance of anchor companies, the impact of successful technologists, the celebration of technology, and the subtle effects of not having the constraints of non-compete agreements.

Google has generated such wealth for its employees that they are now having a significant impact investing in startup companies:

    “One of the most successful public offering in the history of Silicon Valley, Google has made its employees extremely wealthy since going public six years ago. Now, about 50 current and ex-Googlers are helping finance a new generation of startups, 400 at last count. “When people write the history of Silicon Valley 20 years from now,” says Paul Graham, who co-founded the startup incubator Y Combinator, “the true impact of Google could come more from all the things that Google people go on to do after they leave Google.”"

    “Google is one of the greatest engines of wealth creation the U.S.­Silicon Valley, for sure­ has ever known. Since going public six years ago, the search giant has generated more than $170 billion for its employees, ex-employees, and investors.”

Google has created a tier of successful technologists, who are now seeding the next generation of innovation with more than just money:

    “The results have been impressive. Companies backed by Googlers include Twitter, Tesla Motors, and game maker Tapulous. “As Google matures, its alums are continuing to have a huge impact on Silicon Valley and the tech industry,” says Ron Conway, one of the Valley’s most active angel investors, who has backed 190 companies, including Google, Facebook, and Twitter.”

    “One reason for their success is that Google’s angels have more to offer struggling entrepreneurs than just money…”

    “Google’s Angels dabble in a wide variety of businesses…”

Andy Bechtolsheim’s comment puts these recent angel investments into a return on investment context. Bechtolsheim is a founder of Sun (recently acquired by Oracle), and was the seed investor in the couple of guys and an idea that became Google:

    “In an e-mail, Bechtolsheim expressed his sober view of the chances for success among the new wave of former Google employees venturing into angel investing: “The only thing different about the Google mafia compared with other, similar periods in history, is that more money was made at Google by more people (and more money will be lost).”

BW juxtaposes Bechtolsheim’s comment with one from Peter Thiel. Thiel’s comment puts the investments into a context of making the world better. Thiel’s success came in the Web 1.0 era, as a founder of PayPal. Thiel was a seed investor in Facebook:

    “Making mega-returns on an IPO is not the only factor driving these financiers­ nor is it the only way they keep score. “You always hope for strong returns, but the companies that make you proud as an investor are the ones that produce that return by transforming the world for the better­ technologically, socially, and economically,” is how Peter Thiel, in an e-mail to Bloomberg BusinessWeek, described the investments that please him the most. He puts Facebook in that category, as well as a few other companies in his angel portfolio.”

Time will likely show that both Bechtolsheim and Thiel are correct.

Paul Graham presents a macro view of the impact of Google as a new anchor company in Silicon Valley:

    Paul Graham, who co-founded the startup incubator Y Combinator, believes the tech industry has just begun to appreciate that Google’s wealthy ex-employees may have not just a single innovative second act, but potentially hundreds of them. “When people write the history of Silicon Valley 20 years from now,” says Graham, “the true impact of Google could come more from all the things that Google people go on to do after they leave Google.”

The combination of a large number of financially successful technologists, the 20% time that Google employees are encourage to spend on personal innovative projects, the potential that these personal projects can bring to Google as new services, and without non-compete agreements and with Google’s good wishes, these personal projects form a very effective incubator for many spinoff startup companies. This last point deserves further emphasis.

How will people write the history of current era of innovation in Boston 20 years from now?

If the Boston area does not have successful new anchor companies, and does not have a successful tier of technologists/angels, and is still saddled with overreaching non-compete agreements, how do we reinvigorate innovation in the Boston area?

Are we doing all we can and should to promote real innovation?

.

References

And Google Begat…
Future of Tech, Business Week, February 25, 2010
http://www.businessweek.com/magazine/content/10_10/b4169039637367.htm

Slide Show: Tech Investing: How Smart Is the Smart Money?
Future of Tech, Business Week, February 25, 2010
http://images.businessweek.com/ss/10/02/0225_angel_investors/index.htm

Interactive Table: The Top Angels in Tech.
Future of Tech, Business Week, February 25, 2010
http://bwnt.businessweek.com/interactive_reports/future_of_tech_2010/

The Top Angel Investors: Behind the Rankings.
Future of Tech, Business Week, February 25, 2010
http://www.businessweek.com/magazine/content/10_10/b4169039642419.htm

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