What Have VCs Really Done for Innovation?
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What Have VCs Really Done for Innovation?
1–10 of 44 posts
Re: What Have VCs Really Done for Innovation?
#281% of all programmer jobs? Man these VC guys must be smoking crack
Re: What Have VCs Really Done for Innovation?
#381% of all programmer jobs? Man these VC guys must be smoking crack
so, not only they make all the money, they also want to be credited for all the innovation and leadership...
Re: What Have VCs Really Done for Innovation?
#4The venture capital market is crumbling. It used to cost a lot of money to build a company, but not anymore and VCs are no longer the gatekeepers to success. Their exits are puny and most of them fail. They are hunting needles in haystacks. The supply is greater than demand. Their 2+20 scheme is too expensive. The wealthy don't need the VCs anymore and the returns they are bringing in aren't worth the risk.
This crap from the NVCA is not an isolated event. This absurd notion of a founder visa is another data point in the trending decline of venture capital.
VCs are losing their power. They are struggling to keep it. They are crying out for help. They are being destroyed by scrappy startups and small funding orgs like YCombinator.
VCs are going the way of universities and print publications and even television. The barriers to entry are not what they used to be. The Internet, and tech in general, is the revolution they claimed it was to their original investors -- so revolutionary in fact that it is defeating even their own industry.
Why did they think they were immune to Moore's law. As technology costs decrease, supply increases. VCs operated on supply and demand just like every other industry. They controlled access to the supply of capital to startups and to the supply of startups for investors - but not anymore. The Founder Visa is another effort on their part to regain control of that startup market. If they can increase the supply of ventures only they can enable, then they regain power over other startups. If they can get 50% of a startup from India for $1M, why would they fund the same startup for the US that wants to give up only 20%?
Technology is changing so quickly that similar ideas are popping up all over the place. There are a multitude of ideas the vcs can fund. Look at TwitVid here a couple months ago.
All the signs are there. The question is, are VCs going to be able to create hype around another industry that actually needs them or are they going to try to defend the fort like the newspapers are doing now?
The Internet might just be the biggest innovative idea since the printing press. It could be a long time until another change of this magnitude will come along. Venture Capital will always have a place in a growing society, but the opportunities are declining and the number of VC firms will decline as well.
Here are the tips for VC: Make your operations more scalable, increase diversity, fund in smaller amounts and expect less control and equity in exchange.
EDIT: I want to add that I know this is true because VC firms have approached us several times wanting to invest. Other companies in our market were funded in the millions by VCs and they are already gone. They couldn't build the kind of revenue or customer base the VCs expect, but a smaller startup like we are can easily sustain itself.
VC investment is having a negative impact on the potential success of a business because expectations are wildly out of bounds. It takes longer to make money now and the competition for the business idea is so great that investment of capital is not a differentiator like it used to be.
A VC funded startup may have more capital than we have, but we have _way_ more time than they have.
Re: What Have VCs Really Done for Innovation?
#5Some of this critique is surely valid. But people are way too binary about this (vcs-suck vs. no-they-don't). You can see that in the first paragraph, where he argues that VC money wasn't essential to either Microsoft's or Google's success. I don't believe that's true in Google's case. I'm pretty sure that without VC money they wouldn't have been able to hire or scale in the way they did, and without those things they wouldn't be Google.
Re: What Have VCs Really Done for Innovation?
#6The venture capital market is crumbling. It used to cost a lot of money to build a company, but not anymore and VCs are no longer the gatekeepers to success. Their exits are puny and most of them fail. They are hunting needles in haystacks. The supply is greater than demand. Their 2+20 scheme is too expensive. The wealthy don't need the VCs anymore and the returns they are bringing in aren't worth the risk. This crap…
this applies to internet companies, but any other business needs VCs. Sure you may code your startup in a few years on your own, but how are you going to open a factory without any outside investment?
Re: What Have VCs Really Done for Innovation?
#7I believe Angel Investors (not VCs) contributed a lot for innovation.
Re: What Have VCs Really Done for Innovation?
#8The venture capital market is crumbling. It used to cost a lot of money to build a company, but not anymore and VCs are no longer the gatekeepers to success. Their exits are puny and most of them fail. They are hunting needles in haystacks. The supply is greater than demand. Their 2+20 scheme is too expensive. The wealthy don't need the VCs anymore and the returns they are bringing in aren't worth the risk. This crap…
this applies to internet companies, but any other business needs VCs. Sure you may code your startup in a few years on your own, but how are you going to open a factory without any outside investment?
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Re: What Have VCs Really Done for Innovation?
#9I believe Angel Investors (not VCs) contributed a lot for innovation. http://paulgraham.com/angelinvesting.html
Angel investors are now, and always have been, the engines for innovation. Bankers - the old angels - funded Henry Ford. Back in the day, you could get a loan from a bank for a new venture. You can't any more; this, more than anything, is why new innovation is so concentrated in geographic areas.
In the old days, New York banks would give money to an engineer in Detroit. Now, if you want angel money, you need to be physically near the angels. You can raise VC - follower - money from outside your area if you 1) have traction or 2) are a known quantity with a past exit. But a new team in a new market with a new idea? Get thee to the Valley or Route 128, cause that's where the angels are.
EDIT: I should say networks of angels for first money in. SV and Mass have enough angels to syndicate a deal. You're restricted to sugar daddies doing $200K by themselves outside those areas (and maybe NYC). First Round led Mint, but they syndicated it in the Valley. Same deal with iSocket, where Tim Draper of DFJ led, but the deal was syndicated to angels.
And, of course, if you're Shai Agassi, you can raise a ton of money for Better Place, even though you have no experience in battery tech or distribution, because you're Shai Agassi.
Re: What Have VCs Really Done for Innovation?
#10The venture capital market is crumbling. It used to cost a lot of money to build a company, but not anymore and VCs are no longer the gatekeepers to success. Their exits are puny and most of them fail. They are hunting needles in haystacks. The supply is greater than demand. Their 2+20 scheme is too expensive. The wealthy don't need the VCs anymore and the returns they are bringing in aren't worth the risk. This crap…
Maybe when your tantrum dies down you can revisit the fun fact that the founders' visa isn't a VC idea at all. I was going to spell out the details, but they are so obvious that I felt embarrassed.