Venture Capital is still an amazingly young sector. This is part of the reason why I’m so interested in the evolution of the area.
Georges Doriot, the Godfather of Venture Capital, once wrote, “Somebody, somewhere, is making a product that will make yours obsolete.” What’s ironical is that this quote applies to the venture capital model itself.
In these times, I’ve observed two predominant attitudes of venture capitalists:
- Those who are in denial (“The VC model is fine.” “It will come back together.”)
- Those who realize the model must evolve (“Change is necessary.”)
However, at the foundation of these two attitudes sits one thing: the need for hitting a home run. Many funds are drying out. Especially if you’re a boutique fund. Any investment taking place in Q1 and Q2 of 2009 must either be, one, cash flow positive, or two, a potential home-run (insane).
After these last at-bats, we’ll hopefully see the long-term VC’s operate in a way that espouses logic, risk-mitigation and understanding future scenarios before injecting a couple mil into startups.
So this prompted me to create a presentation outlining two critical factors in the future of risk-mitigation within the realm of venture capital:
- The Concept of Staging
- Iterations
It’s pretty abstract stuff if you’re not a venture finance nut. But you’ll be seeing a lot more of these tools in play in the near future.
Who knows… I may even present on these topics in the near future.