Every entrepreneur who took venture capitalist money in the last 40 years can tell you the same story. The VCs exerted far more control than expected; budgets were slashed; friends were fired from the payroll; and “they never really got our vision.” The infamous words of Gordon Gecko in the movie Wall Street, who uttered, “greed is good” as he slashed and burned companies, have become a dire warning for anyone thinking about raising money.
http://www.youtube.com/watch?v=7upG01-XWbY
Given those stories, you’d think VCs are the last thing the world needs to make innovation happen.
But hold on, the tide is changing. It used to be that being a VC meant setting a new course and tightening up a sloppy ship, but that was yesterday. Today the smartest VCs recognize that the rules have changed — today they can provide the fuel for fully functioning ships — AND they face an unprecedented opportunity to help the world innovate because for the first time in history they represent a safe harbor.
This isn’t an ad for VCs (we’ve never raised money), but if these smart folks think the opportunities lay in following three places, maybe you should too.
> Disrupters. Companies that are reinventing the rules. Companies that can produce a result through a product or a service that is dramatically more effective or cheaper than their peers.
> Failing Forward. To be an innovator you must be prepared to fail often. VCs are beginning to recognize that this pattern of fail, learn, fail, learn, succeed — Launch! is a necessary cultural attribute for successful, fast-growth companies.
Here’s a link to the article I wrote on this topic that includes some details on how to set yourself up for some VC money that will fuel your innovation engine: BusinessWeek
Greed might not be good, but as it turns out, VCs aren’t always that bad.
Comments
M A J Jeyaseelan
October 1, 2009 12:00 AM
I have found clients better than VCs. If you have a good idea, then go find a client for the idea than looking for a VC. My experience shows that one can do it.
There is a big ticket innovation that I have been pursuing for the last 10 years. Some thing in the complex data management area where the competition is going to be with the big names in the field like IBM, Oracle and Microsoft. No VC would have had the guts to pitch in for such projects. But then, I have been able to sustain the innovation process by revenues earned from doing projects for select clients based on the innovation. We have been doing that for five years. This has only helped us perfect the technology and finally create a marketable product.
Not that I was not looking at VCs. But then, whatever I could read about VCs, Business Plans and Elevated Pitches made it look a game of wits rather than a collective value creation process. I was sure that No VC is going to wait for five years for my technology to mature. I am not at all blaming them. They are engaged in a different game than innovation promotion.
In my view, it is not always VCs who are in a hurry. Most innovators are also in too much of a hurry. They rush to Angels and VCs hoping that they would help realize their technology dreams and then share the commercial success thereafter.
What is often forgotten is that most VCs have their roots in the stock market business where the focus is on booking profits and moving on. That certainly is not the case with innovations.
I find it very funny, that governments whose main agenda ought to have been one of wide spread innovation promotion have abdicated their responsibility and left it to the care of VC vultures.
If you want to succeed as an innovators remember the three Ps
Passion, Patience and Perseverance.
Avoid impatience even if it is that of the VCs at any cost
October 2, 2009 12:00 AM
Very interesting. I think that potential clients and investors have much in common. There are kinds of each and their values and goals need to align with yours. So often, it isn't money you need, but rather experience, connections, advice...
M A J Jeyaseelan 
