Innovation Anthology #327:
Start-up companies often turn to venture capitalists for money to commercialize their new technologies.
But the days of going cap in hand are disappearing. According to economist and venture capitalist Paul Kedrosky, entrepreneurs are becoming much smarter about the VC industry.
PAUL KEDROSKY: We get preoccupied with what’s happening on the financial side. So the entrepreneurs are a big part of what’s changed here. The entrepreneurs now are getting smarter and getting smarter faster. So there’s two things going on. And they’re getting smarter faster because of what’s happening in their ability to get information about who are the best VC’s? Who venture guys are most appropriate for my business? What are best practices in terms of raising money? What terms should I be worried about that might show up in a legal term sheet from a financer? All this stuff in the past was kind of tribal information that just got handed around from entrepreneur to entrepreneur. And if you didn’t have access to the right person, you could never know it. Now it’s all on the web, on many popular blogs like VentureHacks.com or Fell.com or other places where entrepreneurs can get fantastic information about what otherwise was secret. And quite dangerous, because if you didn’t know the information and you got funded, there was an excellent chance you’d make terrible decisions and it would only show up years later.
Paul Kedrosky is an economist with the Kauffman Foundation and he spoke at the recent AVAC meeting in Calgary.
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I’M CHERYL CROUCHER
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Program Date: 2010-08-03