Venture Capital 3.0

14/5/2010 | Innovatrs | philipletts | 2 Comments

Traditional venture capital is at a Crossroads. The industry is still young by many standards, and like all spotty teenagers, it’s changing.

The first and second generation of professional VC’s have learned a bunch of things, sadly most at the expense of the entrepreneurs they backed and the investors they sold.

First up they learned that venture capital is not private equity or fund management. It’s about individuals and organisations – not stocks, shares or asset stripping and reallocations. Value is created in the marketplace – not on spreadsheets.

Second they learned that venture capital does not scale. It’s an industry where talented individuals make all the difference – no matter how many financially oriented rookies and corporate guys get thrown at the problem.

Third they learned that professional VC’s find it almost impossible to add enough value to the ventures they back so they get increasingly sidelined by the smart entrepreneurs they most wish to invest in. After all, how many successful entrepreneurs choose to build their second business with a VC they have worked with before. Very few.

Fourth they learned that venture investing is not about the deal. It’s about helping build a long term, valuable market leader. No room for deal guys here.

The future of professional venture capital is later stage. Starting with businesses that have revenues of $10 Million and growing.

Early stage ventures have to go a different route. Venture capital 3.0 is it. It’s all about clusters. Clusters of entrepreneurs attracting clusters of angels. Online and offline. Man to man, woman to man, woman to woman. The network is the key.

The core asset is deal flow and so the clusters of entrepreneurs take the lead. Angel investors will swarm around those that attract and nurture the best founders. Their Web platforms will be like online incubators. Venture Capital 3.0 is the future: an entrepreneur centric future. Good bye traditional venture capital.

Tags: angel investors, funding, seed money, start-ups, VC 3.0, venture capital 3.0
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http://www.globalriskconsult.ning.com Boris

On the GlobalRisk community site http://www.globalriskconsult.ning.com we are introducing Risk 2.0, a “peer sourcing” or a “recommendation community” which means members can
· anonymously provide ratings of service providers and their products. Such a concept is already well established within consumer communities and we will be introducing it within Risk and Financial services. The idea is that we will provide ratings for the products and services based on our members’ experiences and hereby benefiting everyone.
· make new recommendations on the products and services you are looking for.
· provide “pain solving” to an individual member by generating relevant content and recommendations.
The first issues to discuss with the advisory board:

1. What are the legal ramifications? My opinion is that there is nothing illegal in forming associations in order to recommend and buy products more efficiently. We got to have a very good legal opinion on this issue and prepare Disclaimers or other necessary documents.

2. Experience in providing solutions for “risk and compliance” products teaches us that most organisations will not want their employees commenting about their experiences on implementing and using those products. I think most individuals would consider this a risk not worth losing their employment. Think about how to address this issue
3. How to ensure that both the anonymity and accountability by the person providing the review can be guaranteed? How to overcome
that issue?
4. How to overcome biases of the users for example “The vendor is always to blame mentality” and guarantee quality of the reports?
5. How to keep the interesting parties from polluting the data? Establish a strict intake process of review generators.
http://www.globalriskconsult.ning.com Boris

On the GlobalRisk community site http://www.globalriskconsult.ning.com we are introducing Risk 2.0, a “peer sourcing” or a “recommendation community” which means members can
· anonymously provide ratings of service providers and their products. Such a concept is already well established within consumer communities and we will be introducing it within Risk and Financial services. The idea is that we will provide ratings for the products and services based on our members’ experiences and hereby benefiting everyone.
· make new recommendations on the products and services you are looking for.
· provide “pain solving” to an individual member by generating relevant content and recommendations.
The first issues to discuss with the advisory board:

1. What are the legal ramifications? My opinion is that there is nothing illegal in forming associations in order to recommend and buy products more efficiently. We got to have a very good legal opinion on this issue and prepare Disclaimers or other necessary documents.

2. Experience in providing solutions for “risk and compliance” products teaches us that most organisations will not want their employees commenting about their experiences on implementing and using those products. I think most individuals would consider this a risk not worth losing their employment. Think about how to address this issue
3. How to ensure that both the anonymity and accountability by the person providing the review can be guaranteed? How to overcome
that issue?
4. How to overcome biases of the users for example “The vendor is always to blame mentality” and guarantee quality of the reports?
5. How to keep the interesting parties from polluting the data? Establish a strict intake process of review generators.