Posts Tagged ‘entrepreneurs’

Entrepreneurs + VCs = Goodness (And why it will help lift us out of the Great Recession)

March 19, 2009

Yesterday, venture capitalist Brad Feld published a candid post in which he made the argument that entrepreneurs played a much more important than financiers in the startup ecosystem. Even though I wrote a book highlighting the importance of VCs, I totally agree with him.

It’s the entrepreneurs that drive innovation. They are down in the trenches building the businesses every day. They create most of the value.

However, without risk capital, the startup system ecosystem would be far less powerful and effective at generating innovation. You simply can not build a business without capital–even in these capital efficient Web 2.0 days. Look at any survey of a small business and the top concern is always money–having enough of it to run your day-to-day operation and getting more to grow the operation.

One of the big reasons that America is the world’s engine of innovation is that we were the first country to develop a professional and robust venture capital market. Now, other countries are following us, but our risk capital market is still one of the nation’s competitive advantages.

It’s also one of the reasons why I think we will lift ourselves out of this recession more quickly than we did in the Great Depression. There was no venture capital market in the 1930s. We have one now and the capital being put to work in startups will create companies and markets that will help grow the economy and revive our animal spirits. In fact, as I detail in my book, the VC industry was born out of the Great Depression when a group of businessmen in New England in the late 1930s realized the U.S. had created a “risk-less economy” and needed to find new ways of creating new companies.

I struggled with this tension in writing my book. I was writing about a VC but I came to see that what I was really writing about was the birth of this startup ecosystem, the entrepreneurial economy. I was writing about the largely symbiotic relationship between the entrepreneur and the venture capitalist. You can’t talk about one without including the other.

Sure, there will always be tensions between owners of a business and the managers. And that’s OK. But instead of pitting entrepreneurs against VCs I think it’s better and more appropriate to view them as partners in a mutually beneficial relationship.

Adeo Ressi Unplugged

January 12, 2008

Here’s the Q&A I promised with Adeo Ressi, the grenade-tossing founder of TheFunded.com. Sorry for publishing it one day late!

Why do you hate venture capitalists so much?
The real question is why do VCs hate me? I don’t think they hate me. I think they feel slightly threatened by TheFunded especially because they don’t know all of the data that it has, since 70% of the content is reserved for members only. That said, the ultimate goal of TheFunded is to improve the relationship between the entrepreneur and the VC. I consider VCs to be among some of my best friends. I have nothing against VCs.

Did your unveiling in Wired magazine change your life? Any regrets?
It’s definitely changed my life. I don’t have any regrets. I had no intention of ever revealing my identity. I was concerned that it would leak out. Rather than have it leak and surprise me one day when I was working in the office and phones start ringing off the hook and I get cease-and-desist letters, I decided I would manage it and plan my coming out.

What’s the worst thing someone said to you as a result of the site?
I haven’t actually had anyone say anything bad to my face thankfully. But in some of the forums people are trying to say slanderous things about me. I presume that it’s people who are threatened by the site’s existence trying to discredit the founder.

Why do you like to stir things up so much?
I didn’t want to stir things up but VC definitely needed a kick in the pants. The way it’s been running the last five years with very complicated terms and strained relationships between entrepreneurs and their funding partners was troubling at best. TheFunded is designed to correct that relationship by adding some transparency. I did guess that it might stir things up but that was not the goal.

Since your site provides a forum for people to criticize the VC industry, do you think you could get venture capital funding for ventures you start in the future?
A number of VCs have offered to finance TheFunded. That presents the ultimate conflict of interest. I could imagine walking into a board meeting: “How are things going? How were we reviewed?” Obviously, taking VC for TheFunded can’t happen. My feeling is that it will be difficult going forward to raise VC.