Does Venture Capital Kill Great Ideas?
john asked:
Source: blogs.smh.com.au
Some ideas are doomed to fail, but most are killed by their creators.
At least, this is the dominant school of thought. But is this really the case?
Just about every venture capitalist I’ve interviewed has said within minutes that startups with opinionated founders have got Buckley’s chance of securing venture capital. Not malleable, agreeable, or willing to move aside for someone more experienced? Then venture capital is not for you.
I bought into this conventional wisdom until a few months ago when a contact of mine told me about the problems venture capitalists brought to his board room: the clashes of egos, the hodgepodge of agendas, and worst of all, the obsession with the big picture when the product itself wasn’t working.
So I was interested to read last week that Sean Parker, the co-founder of Napster and first president of Facebook, stirred Silicon Valley with the launch of a new venture capital fund alongside one of the founders of PayPal, Peter Thiel.
The name of the fund says it all. Called the Founders Fund, it exists in part to support, rather rather than eject, founders.
“Firing the CEO is almost always the wrong decision. In the late 1990s the standing question was, Are you willing to step aside as CEO? We’re more likely to ask, Are you willing to be CEO the whole time?” Parker says in this interview.
This interesting about-turn is a theme that dominates Inc. magazine’s profile of John Abrams, the founder of the world’s first online social network, Friendster. As Inc. tells it, Abrams’ startup was backed by an all-star cast - powerful and experienced investors, and the best managers money could buy. But far from being the silver bullet, its move into the big league was its kiss of death.
Once tagged the next big thing, a “no-brainer” with Kleiner Perkins Caufield & Byers doing the driving, Friendster turned out to be a spectacular failure. Now a Harvard Business School case study on how not to manage a startup, Friendster ran out of money last year and recapitalised at US$3 million.
It’s turne that Friendster was a victim of mismanagement but Abrams argues that it wasn’t a singular failure; it was a systematic failure. With venture capitalists investing on the basis that they’ll strike it rich with one or two investments in every ten, the system was stacked against him. In short, venture capital is designed to spawn far more failures than successes.
Inc.’s story is a fascinating look at the inner-workings of a star-studded board. There were so many cooks in the kitchen at Friendster its corporate strategy was nothing short of schizophrenic.
Abrams says he suppressed his entrepreneurial instincts because of the assumption that others knew better. He’s starting a new business, and while he intends to take his time, he plans to take lots of risks and avoid venture capitalists.
What do you think about venture capital? Does it kill more than it nurtures? Or should startups like it or lump it because this is how the game is played?
Article Publish by: http://www.investmentbankingcentral.com
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Source: blogs.smh.com.au
Some ideas are doomed to fail, but most are killed by their creators.
At least, this is the dominant school of thought. But is this really the case?
Just about every venture capitalist I’ve interviewed has said within minutes that startups with opinionated founders have got Buckley’s chance of securing venture capital. Not malleable, agreeable, or willing to move aside for someone more experienced? Then venture capital is not for you.
I bought into this conventional wisdom until a few months ago when a contact of mine told me about the problems venture capitalists brought to his board room: the clashes of egos, the hodgepodge of agendas, and worst of all, the obsession with the big picture when the product itself wasn’t working.
So I was interested to read last week that Sean Parker, the co-founder of Napster and first president of Facebook, stirred Silicon Valley with the launch of a new venture capital fund alongside one of the founders of PayPal, Peter Thiel.
The name of the fund says it all. Called the Founders Fund, it exists in part to support, rather rather than eject, founders.
“Firing the CEO is almost always the wrong decision. In the late 1990s the standing question was, Are you willing to step aside as CEO? We’re more likely to ask, Are you willing to be CEO the whole time?” Parker says in this interview.
This interesting about-turn is a theme that dominates Inc. magazine’s profile of John Abrams, the founder of the world’s first online social network, Friendster. As Inc. tells it, Abrams’ startup was backed by an all-star cast - powerful and experienced investors, and the best managers money could buy. But far from being the silver bullet, its move into the big league was its kiss of death.
Once tagged the next big thing, a “no-brainer” with Kleiner Perkins Caufield & Byers doing the driving, Friendster turned out to be a spectacular failure. Now a Harvard Business School case study on how not to manage a startup, Friendster ran out of money last year and recapitalised at US$3 million.
It’s turne that Friendster was a victim of mismanagement but Abrams argues that it wasn’t a singular failure; it was a systematic failure. With venture capitalists investing on the basis that they’ll strike it rich with one or two investments in every ten, the system was stacked against him. In short, venture capital is designed to spawn far more failures than successes.
Inc.’s story is a fascinating look at the inner-workings of a star-studded board. There were so many cooks in the kitchen at Friendster its corporate strategy was nothing short of schizophrenic.
Abrams says he suppressed his entrepreneurial instincts because of the assumption that others knew better. He’s starting a new business, and while he intends to take his time, he plans to take lots of risks and avoid venture capitalists.
What do you think about venture capital? Does it kill more than it nurtures? Or should startups like it or lump it because this is how the game is played?
Article Publish by: http://www.investmentbankingcentral.com
Free Insurance Quotes