Breaking Through The Broken:
The Transparent GuideTo Overcoming The Ineiciencies In Early Stage Venture Capital
© 2009 North Venture Partners, LLCdontgosouth.com northangels.com
Fortunately, the timing or xing this problem couldn’tbe more ideal. With the new administration comes apromise o support in the creation o small businesses.Change will come with policies like President Obama’s“Innovation Agenda” which “leverages technologyto grow the economy, create jobs, and solves our country’s most pressing problems.”“Right now, somewhere in America,” believes Obama,“a small business is at work with the next big idea…an entrepreneur is sketching plans or the start-upthat will revolutionize an industry.” What Obamaorgot to mention, though, is that one garage downrom the next Facebook, an entrepreneur is workingon the next big fop. Along with the many brilliantand world-changing ideas seeking capital, there arealso plenty o terrible ones. How can an investor possibly know the dierence between the two at suchan early stage? How is an entrepreneur to knowthat the time (and capital) they are spending takingtheir project down a certain path may be much better spent directing it in an entirely dierent direction? With today’s one in ten success rate or creating new ventures, we don’t have time to just “bet more”;we need to bet smarter because what matters mostis the output that these invested dollars return.This all raises the question; what is the early stageinvestor community currently doing to optimizeentrepreneurship and increase the success rate o their investments?
Let’s not orget that entrepreneurs, and the investorsthat support them, need all the help they can get toturn these ideas into world-changing realities, and
Change We Can Must
contrary to popular belie, more money is not theonly answer.The central issue is not with the quantity o ideas or number o willing investors, but rather in properlypairing the two. There are plenty o investors willingto provide the capital needed by the entrepreneursworking to change the world, but there is oten acommunication breakdown between the two parties.On one side there are the mysterious “deal mak-ers” who might seem easy to reach with the clicko a mouse, but in reality are incredibly dicult toengage with meaningul dialogue. On the fip side,there are the passionate entrepreneurs who are eager to nd out what an experienced investor thinks o their “big idea,” but usually hear back nothing at allater submitting their materials or consideration.So what’s the rub? Well, there are a number o problems that areholding us back. For one thing, the process or raising venture capital is shrouded in secrecy. Isn’tit strange that in an industry hell-bent on buildingnew companies and “inspiring innovation”, mostinvestors aren’t even willing to take the time to giveentrepreneurs some valuable eedback; specicallytelling what they’re looking or, and guidingentrepreneurs to ocus on certain areas o a businessi they want a legitimate shot at raising investmentcapital? Don’t you think i entrepreneurs built their businesses around the actual criteria they werebeing evaluated on, they’d have a much better shotat connecting with investors? O course bothparties have to be judicious with time and energy,but the complete lack o communication is benecialto no one.