Fred’s quality post this morning on the Fiction of the 20% further differentiates USV as an innovative venture firm and is another data point for anyone who’s trying to understand how they’re making so many quality investments and successful exits.
When the world breaks, spoils are rewarded to those who figure out the emerging trends first. I think it’s safe to say that Fred and Brad have shown one way to successfully play in early-stage investing.
Alex sums up the state of the venture world nicely in a post today at Read/Write Web on The New Rules of Technology VC. From how the old model worked to why new is different, Alex summarizes the changes that occurred and touches on the future that lays ahead.
The larger venture firms are going to have to turn to later rounds of tech, bio and alternative energy. It’s a function of their structure and returns necessary to flourish.
The impact on early-stage tech investing is profound: the traditional model doesn’t make it attractive (/ feasible?) for larger firms to play there, creating a gap.
It’s the opportunity that this gap has created, and the various strategies to address it, that is most interesting to me.
Innovative VC firms like USV are breaking ‘traditional’ (read: inane) rules and reaping the reward. Firms that invest along early-stage processes are emerging to bridge the equity gap (think: Invention Capitalists, Commercialization Capitalists, and the like). Angel syndicates are developing that can also fill the need.
“The winner of all this turmoil”, says Alex, “is going to be the consumer.” Agree. But let’s not forget: entrepreneurs, those investors who anticipated the trend and are positioned well to benefit, and larger firms who move to later stages and enjoy great returns with minimized risk.
Disclosure: I work for AdaptiveBlue, a start-up founded by Alex, that has taken investment from USV. And you know what? We rock. Long Alex. Long USV. Long rocking.
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COMMENTS / 7 COMMENTS
Wrap up: The New Rules of Tech VC, the Fiction of 20% and VC Innovation : Olson’s Observations added these pithy words on Oct 04 07 at 7:04 pm[…] The Changing Landscape of Early-Stage Investing - Fraser Kelton on Disruptive Thoughts […]
Leigh added these pithy words on Oct 04 07 at 4:08 pmSo the dragons on dragons den yelling at entrepreneurs saying things like “give me 50% or we are out. and then you have NOTHING but we are rich and successful and you are a plebe” is not the norm? (and I can’t tell you if you they took it bc i was too disgusted and switched to mark cuban dancing with the stars and then i was too disgusted again and just turned the damn thing off)
Fraser added these pithy words on Oct 04 07 at 4:16 pmLeigh - I can tell you that a few days ago I caught 10 min of the Dragon’s Den. It was hilarious(ly sad). The entrepreneurs asked for $300k for 10%. The rich dudes come back and say, we’ll give $500k for 50%. As they cut to commercial, the announcer comes on and proclaims that the “investors had their socks knocked off and are offering a better deal than originally asked, $500k!” Not able to take it I switched over to Dancing with the Stars, and seeing Jenni Garth instantly wondered what happened to quality programing like 90210.
Leigh added these pithy words on Oct 04 07 at 4:26 pmSeriously F…i think we watched the same 10 min of TV… oy vey. and for the record, I can say with strong conviction, that owning a marketing company, and being an entrepreneur is NOT the same thing…
Leigh added these pithy words on Oct 04 07 at 7:08 pmSo the dragons on dragons den yelling at entrepreneurs saying things like
“give me 50% or we are out. and then you have NOTHING but we are rich and successful and you are a plebe”
is not the norm?
(and I can’t tell you if you they took it bc i was too disgusted and switched to mark cuban dancing with the stars and then i was too disgusted again and just turned the damn thing off)
Fraser added these pithy words on Oct 04 07 at 7:16 pmLeigh - I can tell you that a few days ago I caught 10 min of the Dragon’s Den.
It was hilarious(ly sad).
The entrepreneurs asked for $300k for 10%. The rich dudes come back and say, we’ll give $500k for 50%. As they cut to commercial, the announcer comes on and proclaims that the “investors had their socks knocked off and are offering a better deal than originally asked, $500k!”
Not able to take it I switched over to Dancing with the Stars, and seeing Jenni Garth instantly wondered what happened to quality programing like 90210.
Leigh added these pithy words on Oct 04 07 at 7:26 pmSeriously F…i think we watched the same 10 min of TV… oy vey. and for the record, I can say with strong conviction, that owning a marketing company, and being an entrepreneur is NOT the same thing…
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