Again this post in Funding post continues from the topic of serious bootstrapping trend. More start-ups being capital efficient (good thing for entrepreneurs) etc. This comment below highlights the current trend very well:
“I see a lot more capital entering the lower level of the ecosystem probably because… the opportunities for being capital efficient are actually more available now than they were before,” said Owen Davis, managing director of NYC Seed.”
More about the subject in the video below:
There is a reason why this is also looking more appealing for VC’s. The VC’s problem is well outlined in this post: The Venture Capital Match Problem, by Fred in Ask VC.
Below is my dialog with Fred (in comments):
Me:
I think this just shows that money does not solve problems. The problem here is not too much money, but how it’s now distributed.
VC industry is starting to look like the newspaper industry 
– better to wake up, the blogs are coming…
Fred:
What are the blogs of the VC business?Things like Y Combinator are great but they are feeding us even more opportunities so I see them as additive, Although I also see blogs as additive for the newspaper business if they’d just see themselves as curators and aggregators instead of content creators
Me:
I guess the closest thing to “blogs of VC industry” today are angel investors. But that’s for today. Also Y-combinator and the likes are great too and could be considered as “blogs of VC industry”. However their “next step” need to change away from just VC’s.
The fundamental change will become, when there are “platforms” for anyone to start a “blog for VC industry” and that’s what we are doing in www.growvc.com.
Overall, we feel that in long term the money will be spread to more potential start-ups and more of them will not go via IPO but just buy back of shares, mergers etc. with lower ROI. But that’s OK if the time for ROI is shorter and cost of management is lower.
So – be more direct, spread wider, lower the management cost, speed up the ROI cycle and you can accept lower ROI.
If you think about the structure of today, from where the VC money really comes from, you start to see the “big picture”. – basically it means that individuals like you and me pay for pensions funds etc. and these funds then invest to VC funds. VC’s then make investment decisions and “manage” the investments, all the way to take it public (hopefully). Basically just to sell it back to us…
When more people will start to understand this cycle because of more info and transparency online (if they are interested), people will not accept this structure. Because in the long run what matter is, if the companies in question sell what matters. And that is not a question of size.
Fred:
Got it
I hope this works
It would scale much better
Tags: Angel_Investors, early phase funding, Entrepreneur, Grow VC, VC 2.0, VC trends
