Mecury News Says Entrepreneurs Don't Need Cash
Or have not learnt that the value which they could sell their company has come down so the entry valuation has come down.
This badly reported story does highlight an important issue. Tim Oren Ruminations on venture capital, trust networks, and information theory is a VC's view from the other side of the fence. Howevr, Tim is an entrepreneur turned VC, and the easy shots are against the finance / consulting types. Where there is a definite trend for prescription. I'm a finance type and would like to think that I might have a little humility; however, I'm sure that from time-to-time I have used prescription to mask ignorance.
Another factor in this story is the investment stage; or how early is early? A little commercial traction never hurt before making an investment. Indeed one of the joys of investing in Russian tech is how developed the technology is by the time that it gets close to being investable. The VentureOne reports make it clear that if you intend to be an early stage investor you had better be sure that you can keep "paying-to-play." Put another way Angel investors have the lowest returns of all the stages because they can't or won't pay up. Crammed down is only polite for wiped out. There are some good reasons to be very early; even better to pay early prices for more developed companies.
Back to ignorance; it should help to be an investor if you have just come from the industry. Taken to a logical extreme corporate venture teams should be the best investors in their own industry. Access to IBM's, for example, many divisons should give an IBM investor a massive head start in technology and market due diligence. Yet history does not hold this seemingly self-evident fact to be true. Maybe its the other factors associated with being in a corporate venture group that stand in the way.
Never having worked with a Venture Partner the following statement is somewhat devoid of personal empirical evidence. However, it seems from here to be a good idea; combining entrepreneurship with the discipline of an institutional investor. We'll see.
Apologies if you made it to here; this is a terrible blog. I'll have to come back to this theme later.
18 August 2003
Mecury News Says Entrepreneurs Don't Need Cash
Or have not learnt that the value which they could sell their company has come down so the entry valuation has come down.
This badly reported story does highlight an important issue. Tim Oren Ruminations on venture capital, trust networks, and information theory is a VC's view from the other side of the fence. Howevr, Tim is an entrepreneur turned VC, and the easy shots are against the finance / consulting types. Where there is a definite trend for prescription. I'm a finance type and would like to think that I might have a little humility; however, I'm sure that from time-to-time I have used prescription to mask ignorance.
Another factor in this story is the investment stage; or how early is early? A little commercial traction never hurt before making an investment. Indeed one of the joys of investing in Russian tech is how developed the technology is by the time that it gets close to being investable. The VentureOne reports make it clear that if you intend to be an early stage investor you had better be sure that you can keep "paying-to-play." Put another way Angel investors have the lowest returns of all the stages because they can't or won't pay up. Crammed down is only polite for wiped out. There are some good reasons to be very early; even better to pay early prices for more developed companies.
Back to ignorance; it should help to be an investor if you have just come from the industry. Taken to a logical extreme corporate venture teams should be the best investors in their own industry. Access to IBM's, for example, many divisons should give an IBM investor a massive head start in technology and market due diligence. Yet history does not hold this seemingly self-evident fact to be true. Maybe its the other factors associated with being in a corporate venture group that stand in the way.
Never having worked with a Venture Partner the following statement is somewhat devoid of personal empirical evidence. However, it seems from here to be a good idea; combining entrepreneurship with the discipline of an institutional investor. We'll see.
Apologies if you made it to here; this is a terrible blog. I'll have to come back to this theme later.
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