Comments on: Is Venture Capital Broken?

By: Valto

Valto — Fri, 05 Dec 2008 23:44:44 +0000

Yes it is – and I’m so glad that we we are working to make some serious changes in this field with Grow VC. http://www.growvc.com will be more than current VC or Angel business model on steroids.

Grow VC will break the mold and restructure a new better working model for new international start-up ventures. It will change the way new ventures will be funded – forever…

By: The more things change, the more they stay the same… « Five Years Too late

Sat, 15 Nov 2008 13:31:46 +0000

[...] shares a few thoughts and anecdotes about a lot of the discussion flying around the web about the VC model being broken. James D. Robinson [...]

By: Aaron

Aaron — Fri, 14 Nov 2008 01:47:26 +0000

Andy, I disagree. Standards are very helpful at decreasing friction. I’ve seen a real difference in philosophies on east and west coast on standards. Also, having standards in term sheets is very different than standards in deal documents. When it comes time to do Series A, fees go up because law firms argue over minutiae. I think it’s fine for standards to exist in illiquid markets. Look at Yossi Vardi, he has a standard: it’s 20% for 100k and it’s all common. Everybody gets the same deal, fees are low and friction is low. He also uses it as a litmus test to see who will work with him. Yossi describes himself as “spray and pray” investor so I realize it’s not a standard offer.

There are also standards for equity packages for non-founding CEOs, and other executives. There are many “standards” in our industry and I think they are useful starting points.

There are times when standards hinder innovation. I’m thinking of the 2/20 structure of venture firms and how that limits Limited Partner money from finding alternatives to venture firms such as betaworks or seedcamp etc. These kinds of “venture investors” are not well understood by investors who have only known one standard.

By: Andy Weissman

Andy Weissman — Thu, 13 Nov 2008 19:59:30 +0000

I think standard terms is the wrong focus; the argument that legal fees are too high and add too much friction to early stage investing is a canard – i’ve done dozens of deals fast and cheap. The market is non-standard for a reason – private companies with illiquid stock – there are no real industry standards (nor should there be).

I think the best firms do have structural advantages – FR, USV, Spark – I and think those are the ones that orient themselves to real actionable, measurable ways to assist portfolio companies