[plankers]

Interesting analysis of the differences between the two scenes, but I'm not convinced of Danco's assertion that bad angels keep away the good. It seems equally possible that the attractive draw for angels (and all VCs) of a red-hot scene like SF is simply too powerful, so all the "good" angels flock there rather than waste their time in a less productive market.

The same phenomenon he describes where liquidity events propagate the cycle of early movers becoming angels could easily take place on a larger scale where an exodus of "good" angels from SF seeking value in other markets disseminates this model and evens it out a bit. This could also dampen some of the externalities created by this feverish form of capitalism i.e. ludicrous real estate prices, crushing income inequality, etc.

Of course this would take some rather weighty exogenous event taking place to make either SF or the US unattractive locations to start a business.