Why do we need VC’s?
July 25th, 2008
Interesting article by the StartupCFO pointing to another post by Silicon Alley about early stage funding.
My feeling is that VC’s tend to wait for the deal of the century in order to throw in as much money as possible in order to get a large part of the pie. While this might work for some industries (Pharmaceutics for example), it no longer works with the Internet industry. A few months ago, the BlitzWeekend project proved that a great concept/prototype could be designed and created in less than 48h. Many people were skeptic but in the end, very interesting prototypes were indeed demoed to the attendees and a judge team.
The facts are plain simple:
- We don’t need expensive Sun servers
- We don’t need expensive bandwidth
- We don’t need expensive Oracle databases
- We don’t need expensive phone systems (PBX)
- We don’t need expensive Aeron chairs either
- We only need money to pay salaries.
Of course, that’s exaggerating of course but that’s how cheap it is to start a business nowadays.
Guy Kawasaki spent 20k on Truemors (one of his startup) and I think he paid too much for it. A big chuck of it was on legal fees actually. Being a VC himself, we can’t blame him for not covering that area. He’s probably used to deal with lawyers.
Everything is in the cloud these days. You can host your web servers and your database online. You don’t even need a physical office anymore. Everything is becoming virtual, even assistants! My prediction is that there will soon be toolkits (like Yahoo Pipes but more advanced) to develop your own online business for a low monthly fee. Everything from code to design to marketing will come out of the box. The worse thing? I’m pretty sure someone is working on this as we speak..!
It’s becoming that easy!
Will we see a change in the way VC’s work with Internet companies? Will we see them leave the Internet industry to focus on other larger industries? It remains to be seen but I believe they must adapt or die.
The way I see it, VC’s must become startup centers where you bring your ideas. If you are accepted, then they will match you with other people so you can use their skills (to fulfill your lacks). You will be able to use their network and office space (if needed) for a few months until your product is ready. A super incubator in some way. That would be nice and we would see way more great companies. Maybe not all rock stars like Google, but a lot of damn good companies for sure. If I were a VC, I’d be working on this right now.
Posted in Funding, Incubator, Startups, Venture capital, investissement | Comments (2)
July 26th, 2008 at 6:54 am
Thanks for the link to my post. I like the idea of surrounding young entrepreneurs and startups with experience and helping them fill the gaps - either through mentor ship or all the way to incubation. The latter has been tried before and not worked. There isn’t a cookie cutter template for company-building - though are there are some commonalities that can be centralized. The trick is find really good people, who have the experience, and don’t have a conflict of interest (because they’re VCs) to put your idea on steroids.
July 27th, 2008 at 6:42 pm
Hello Mark,
Thanks for visiting my humble blog. What you’re doing is the best thing you could as there’s no “startup school”. I really appreciate your posts and I urge anyone who hasn’t subscribed to your RSS feed to do so immediately!