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VC woes

2002-11-15 19:01:25+00 by Dan Lyke 3 comments

Wow. Dave Winer labels Too Much Ventured Nothing Gained a "must read". I'm not sure I'd go that far, but it did spark a few neurons on the state of venture capital that need some further exploration. Recommended.

[ related topics: Dave Winer New Economy ]

comments in ascending chronological order (reverse):

#Comment made: 2002-11-15 23:17:19+00 by: meuon [edit history]

I don't understand all of it, but it looks like our original philosophies are better long term then we had hoped. Short term, I sometimes wish we had ridden the bubble, and a few people I know did it well.

the worst gist I get out of his article is that the lack of VC will kill a lot of good R&D from ever happening and what little edge the US has in that arena could erode further.

#Comment made: 2002-11-16 01:32:28+00 by: Dan Lyke

Things I got out of it:

  1. There's a couple of billion that various organizations think they have invested in venture funds that is no longer in those venture funds. The revelation of this fact might cause another set of financial scandals of the Enron/WorldCom class, and because much of this money comes from institutional investors, might domino in... "interesting" ways.
  2. Venture funding is tight, not necessarily because the cash is there, but because the fund managers are panicked. They're also lying through their teeth, but that's natural.[1]
  3. This attitude will lead to innovators finding other sources of capital, which could shift the balance of power away from the current VC geographic centers, and might even shift the balance away from this country.

Those were my takeaways.

[1] And not just about the idea that they'll be able to make back the billions they've squandered plus a return in the next 7 years; "I say I'm in the venture assistance business" my ass. In the past few years I've talked to a shitload of VC like people, and not only were they willing to piss their money away on bad ideas while ignoring good ones (and we had some actual, real proposals that had money making potential out there on the table), they were also pretty adamant that they weren't really bringing any skills to the table. Not in so many words, but the less work they had to do, the better. I think that this is why so many of them got suckered, when it looked like someone else had done their homework for them, they didn't do it themselves.

#Comment made: 2002-11-16 03:17:36+00 by: dws

Another aspect of the current situation that the article touches on briefly: in the quest for returns, VC's are turning the screws so tightly that many entreprenuer are saying "why bother?"