Disrupting Venture Capital?
While I’ve always been weary of people who set out to be disrupters (as opposed to setting out to serve customers, or setting out to raise up better entrepreneurs… ie: I prefer a tangible goal to a philosophical one), there is value in this conversation.
Now while I’ll happily admit that I don’t have the experience of Dave, Rick, Shel and others, I’d still like to put my two cents in. First, some thoughts that have framed my idea generating:
- Is it best for the industry, for entrepreneurs, or for VC’s to have a focus on larger investments with higher payouts (ie: the lottery mentality)?
- Is it best for entrepreneurs and investors to have VC’s who aren’t passionate about the areas they are investing in, and who don’t have actual experience in those areas?
- How do we increase the ratio of investments to successes?
- Is there a disconnect between receiving financing and actually knowing what to do with it?
- How can individual VC’s be motivated not only to find performing companies, but to perform themselves… without motivating them to go after only big successes?
- And many more…
To me, an outsider, these are some of the areas of weakness that many VC’s have (not all, because I know some incredibly smart and succesful VC’s who fall way, way outside these weaknesses).
So I decided to put on my entrepreneurs hat and ask myself what I would do if I were entering the VC business (I’m not, btw). What would I do to differentiate my firm, what would I do to increase my success rate overall, what would I do to ensure more big successes (even though we wouldn’t be focussed on them), what would I do to find and maintain hunger amongst the individual VC’s in the firm, as well as the entrepreneurs, what would I do to ensure entrepreneurs were not only ready for the industry they were about to enter, but that they felt supported after funding took place (without feeling “controlled” by the VC)… These were all the thoughts going through my head.
And, while I can say I’ve found the answer to all of them, I’m hopeful that I’ve found an answer to some of them.
Here, then, are some thoughts and ideas, in the “what would happen if” style (I find I think best if I ask open ended questions):
- What would happen if VC’s could only look at an area if they had not only solid experience in that area, but a huge amount of passion for it?
Would they naturally find people who were also passionate, as opposed to people who were just looking for a big hit? Would they not naturally have contacts in the industry, and be able to mine those contacts for the right team first, and the right idea second? Would they eventually naturally leave to start their own company in that area, with the experience they had gleaned?
- What would happen if between the deal being signed and the company actually getting funding, if entrepreneurs and the management team had to spend a (paid) month in training, improving their idea, having their idea challenged, getting specific training in areas they were weak in (public speaking, accounting, critical thinking, team building, etc)?
Would we have companies who were more able to enter their industry with confidence? Would it be a bit like marriage counselling, where some of the underlying “issues” that any team faces got brough to the fore and turned from weaknesses into strengths? Would the time spent refining the idea generate a greater rate of success, a more highly targetted product or service and a greater overall vision?
- What would happen if VC’s employed people dedicated, effectively, to “R&D”? Whatching industries, finding trends, and generating solutions to issues?
Would those VC’s have not only a wealth of knowledge for entrepreneurs to draw upon, but a wealth of contacts to pass on as well? Would those VC’s be able to choose to fund an “idea” and then find the right team, from their vast network (built from passion and visibility in the industry), to run with that idea? Would having a set of answers to problems allow individual VC’s who were “born” in the industry, to return to it at a time of their choosing?
I had some others, but I feel these are the strongest “what would happen if” type scenarios. After all, if the biggest weaknesses of the industry (and I’m not saying they are, since I am an outsider) are that there isn’t enough hunger, there isn’t enough connection, there isn’t enough training / equipping / mentoring and that there is too big of a disconnect between the VC’s and the entrepreneurs, then perhaps these ideas go a small way towards turning those weaknesses into strengths.
Again, I’m just a lowly entrepreneur, but if I were starting a new VC firm (I’m not), these would be some of the thoughts going through my head.
I’m sure people far smarter than myself will have more, and bigger, issues they can see and more, and better, solutions to those issues. But that’s fine.
At the end of the day, though, I believe any company needs to focus on changing just a few things, and changing them with a purpose. Hopefully this stirs some ideas and conversations. And hey, who knows, maybe Rick’ll wanna have coffee when I’m in TO next month ;-)
|Print article||This entry was posted by Jeremy Wright on January 28, 2006 at 4:34 pm, and is filed under Business, Work. Follow any responses to this post through RSS 2.0. Both comments and pings are currently closed.|
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