Time’s they are changing… at the cross road of yet another evolution!

21Apr09

 

Yep! Times are changing, like it or not, they are changing, and it’s all for the good! I’ve been reading allot lately, about the lack of funding for entrepreneurs, the poor VC returns, the lack of VC funding, the lack of recurring entrepreneurs, the “broken VC model”, what to do & what not to do from deep experts and deep commentators alike, even the incubator model has resurfaced again!


Yet, while all that is being said, what I really like to see is what is being done. People taking action. I love leadership, in every form it takes, right or wrong, I highly respect leadership. So, without re-writing what has already been said over the last few weeks, I thought I would share with you a few interesting post I’ve read, which provides views of our industry from different angles, from players within our industry (but from both sides of the table), with unique comments which are representative of the times we live in, times that are changing… And yes, even though we have witnessed two positive tech-IPO’s (Language software Rosetta Stone and online college Bridgepoint Education) it’s not bringing us back to the heydays. Entrepreneurs are realizing that not all great Companies are made for the VC high growth model and not all VC’s are made for funding entrepreneurs…  don’t miss the comments, sometimes even more revealing than the post itself.

 

First angle, some hard facts:

Venture Capital Investing Hits 11-Year Low

The Wall Street Journal, produced by the editors of Dow Jones VentureWire

Venture capital investment plunged 50% in the first quarter from a year ago, signalling what could be a fundamental shift in the industry’s size and direction.Venture-backed companies raised $3.9 billion in the first quarter of this year down from $7.78 billion in the first period of 2008, according to VentureSource, an industry tracker owned by VentureWire publisher Dow Jones & Co. It was the lowest quarterly investment since 1998. The total fell significantly below the $5.95 billion invested in the fourth quarter of last year when the collapse of Lehman Brothers Holdings Inc. and other economic shocks took their toll on the venture business.

For the whole story please go to The Wall Street Journal http://bit.ly/BTLLW

 

Second angle, the entrepreneur turned investor:

Reid Hoffman: My Rule of Three for Investing

Reid is the founder and CEO of Linked-in and  an investor in over 60 web ventures including Digg, Facebook, Flickr, Friendster, FunnyOrDie, Ning, Last.fm, Six Apart and Technorati.

As a serial investor, I’ve enjoyed backing some good Web 2.0 companies, and it’s helped me develop a shortlist of criteria to cut the wheat from the chaff. After five minutes of a pitch, I know if I’m not going to invest, and after 30 minutes to an hour, I generally know if I will. Many entrepreneurs are product-focused, which leads them to pitch the brilliance of the product. Others are money-minded, so they can over think the business plan. But neither of these approaches answer the first few questions I want to know as an investor:

For the whole story please go to Techcrunch at: http://bit.ly/EhYWK

 

Third angle, the entrepreneur:

Incubators, accelerators, and ignition

by David Crow 

I am still curious about startup incubators. Mostly because I think that they do a great job focusing attention and driving buzz around the startup activities in a community. ReadWriteWeb has a great summary of seed fund incubators. Maybe we don’t need an incubator. But LaunchBox and DreamIt have been successful in building the local communitiesin Washington, DC and Philadelphia respectively. And there are local entrepreneurs heading to Y Combinator, there is a need and a desire for the benefits these programs bring for the entrepreneurs and the community.

For the whole story please go to StartupNorth.ca at: http://bit.ly/11dZMb

 

Fourth angle, from the top tier VC:

Venture Capital Under Attack

The Wall Street Journal, by Adam Grosser, a general partner with Menlo Park, Calif.-based venture capital firm Foundation Capital

As a venture capitalist, my job is to find great ideas and turn them into great companies. The journey to find these ideas has taken me from inventors’ basements, to obscure research labs, to, in one case, a smoky Milwaukee bowling alley renowned for its fried Twinkies. With a lot of hard work and a little luck that journey ends on the floor of a stock exchange, witnessing a company you helped build go public. It’s a helluva ride.

For the whole story please go to The Wall Street Journal http://bit.ly/HXVS0

 

And finally, the fifth angle, the evolutionary VC point of view:

A VC Revolution In The Making

PEHub, Georges van Hoegaerden is the Managing Director at The Venture Company 

Venture Capital is broken in some fundamental way. So much so that PCG predicts a revolution and a complete redesign of the Venture Capital model, with CalPERS nodding in agreement. CalPERS has gone from a yearly review of their asset allocation to quarterly and is currently debating new hybrid asset allocation models. That means less dependency on VC, and more on other vehicles. At the same time it is looking to reduce its relationships to only the top quartile VCs and getting out of the mid and bottom tier ones altogether. Annex funds, created to fill the void of fleeing late stage investors, are not found to be interesting as the majority of the funds currently in the pipeline will not produce positive returns anyway.

For the whole story please go to PEHub http://bit.ly/MamWo

So, after reading the above angles on the current state of affairs of the VC industry and tech-entrepreneurs world, what do you think? Is the VC model broken, dead?… or is it just evolving… just like any other business!

Good times lay ahead, and yes those times they are changing, great entrepreneurs and great VC’s alike are building the next generation of tech companies and venture capital funds, new approaches, new models… I feel we are at the cross road of yet another evolution!

 

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