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Austinvoice's Clips

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Where Have All the Bold VCs Gone?

Apr 15, 2008

TechCrunch As startups become cheaper to launch, more and more venture capitalists are finding themselves left out in the cold. Either angel investors are beating them to the punch in funding new startups, or Google buys them before any VC even gets to hear the company’s pitch. In fact, angels invested $26 billion in startups (Read More)

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2 Comments

News Flash

Mood

Jasongoldberg,

Apr 16, 2008

: It costs less now to prove more.

5 years ago you needed a couple million dollars and usually at least a year to get a good product to market.

Today, you can get to market on a few hundred thousand dollars and a few months.

That gap has created a venture gap.
Venture firms raised these huge funds and need to invest them.
The scaresest resource a VC has is his/her time. It’s challenging for a VC to spend his/her time chasing $250k deals when they need to invest a billion dollar fund. VC’s need to put money to work and they need to see a clear path to turn $5-10M in investment into $200M+ in gain 1/10 times.

This venture gap has provided an opening for angels to not only be the first money in, but to also be bigger players as their money lasts longer and takes companies further.

I’ve heard from many savvy VC’s over the past few months who recognize this venture gap and who are starting to get creative around how to get in first.

The entrepreneur benefits from all this. Good money will always chase good ideas. A few years ago many an entrepreneur was beholden to their VC’s from day 1 — they had to be or they couldn’t fund the business in the early days. Today though entrepreneurs can get further along with less money, enabling them to prove traction before raising VC if they so choose. Angel terms are typically less onerous than VC, another positive for the entrepreneur. That VC’s are now starting to figure out how they too can play in the early early build it for cheap game — also positive for the entrepreneur.