I read Fred Wilson’s post ‘Understanding VCs’ with great interest recently. I agree that VCs are not heroes, I think they are real people. I have been lucky enough to meet & video interview many VCs & I have supported female VCs to have a higher profile. Jason Mendelsohn told me years ago that vcs are often treated like ‘the hot girl @the party’. I have been to enough conferences in the Bay area now to see how they get mobbed afterwards.
When I came to Silicon Valley over 6 years ago, I was told by all the VCs that I spoke with that the Venture Capital industry was a cottage industry. They suggested that the best way to obtain funding was through networking. Also that entrepreneurs should get to know investors before they needed funding. In those days if you lived here & attended conferences & meetups that was reasonable.
However nothing stays the same & lately startups & venture capital are trending all over the globe. Venture capitalists have become the movie stars of Silicon Valley which has now become its own version of Hollywood. We even have entrepreneur tourist coaches that do the rounds of Silicon Valley. There is a TV comedy version of Silicon Valley. VC firms even have their own PR staff or contracted PR companies & some are not even allowed to answer questions from an audience before their PR person has reviewed.
Amongst all this intense change many have benefited. The world now benefits or potentially benefits from the venture/startup model that was born here. Even corporations which are notoriously slow to adapt to change are now looking at innovation through the startup ecosystem via corporate venture & accelerators.
But there have been losses for this ecosystem that may be hidden to some & therefore has not been addressed. Now it is much harder to gain access to ‘getting to know’ venture capitalists before you need funding. Many venture capitalists will only speak for top of the range conferences such as TechCrunch Disrupt etc where they are certain to get good media coverage for their efforts.
Silicon Valley used to be a place where ‘everyone helped each other’ but now not many have time for others in the race to make money or to become a star of this ecosystem. Of course the almighty dollar is what prompts business & therefore the startup/venture model. However what was really behind Silicon Valley were the people & the networks they formed & how they all supported each other.
Yes I feel in even 6 ½ years that there has been a lot lost & that is what has prompted me to start VC Spotlight. I find the Venture Capitalists fascinating & interesting people — they are in an enviable position to know about upcoming innovations & the inside of startups & companies by investing & sitting on their boards. But they are also smart, diverse & interesting people as individuals & as such each can contribute in diverse & interesting ways to the ecosystem & their companies. I have always felt that my contribution was to humanize the vcs through video interviews & talks. And when I started doing this years ago to identify Why are Women Funded Less than Men? I was motivated by this factor & received feedback particularly from female entrepreneurs that this was helpful.
Some questions arise now:
How do investors contribute now to the ecosystem not just directly to the companies in which they are invested?
How do investors contribute to the companies in which they are invested?
It is not just money that entrepreneurs need — how can they be supported in other ways?
Also I thought Jonathan Aberman’s post The dirty little secret about venture capitalists was pertinent to this discussion. He shatters the myth that vcs have the money & therefore are looked up to in the ecosystem.
How have we ended up with an entrepreneurial ecosystem where the center of the discussions are gatekeepers with the money? What makes venture capitalists so interesting? The simple explanation would be that we have the money. But, that’s where the dirty little secret lies. We want you to think we have the money and that the brightest and the best need us. Simply put, we want every entrepreneur who could possibly be suitable for our investment dollars to contact us. We want all roads to success to appear to lead to our offices, so that we have the option to invest.
Where is Silicon Valley going now? And what cost is there to the Silicon Valley startup ecosystem? I am left with more questions.