

The Next White Whale - dboyd
http://www.cringely.com/2009/12/the-next-white-whale/

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Brushfire
I think the biggest problem here is time. VC firms are generally not manpower
heavy, and sorting through unfiltered business plans is very time consuming,
if not painful. That's why they prefer the referral chain method.

A GP I spoke with recently (on Sand Hill Road, potentially even one of the
firms Cringely sent his plan to) put it like this: If you aren't smart enough
or dedicated enough to work all possible network connections to get referred
to our firm, you probably aren't smart enough or dedicated enough for us to
fund you.

This comes down to the idea that most VC's (not all), invest in people\teams,
not ideas.

A submission from Cringely followed by an article on his blog definitely
qualifies as a filtered referral, so any results from his 'test' wont be very
representative. At least he realizes this.

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mixmax
This whole referral process with VC's seems terribly broken to me. The
argument that _"If you aren't smart enough or dedicated enough to work all
possible network connections to get referred to our firm, you probably aren't
smart enough or dedicated enough for us to fund you"_ appears to be born out
of laziness or lack of manpower, not because it's the best process.

Surely there are entrepreneurs that don't have connections on Sand hill
(almost all European startups for instance) that have a compelling offer a VC
would want to have a look at.

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rjurney
At the same time - its not that hard to move to the bay area and get inroads
into sand hill road. Why shouldn't you have to do that to get their money? How
is getting in the front door of a VC's office all that different from getting
in the front door of a customer's office? Why should you be the exception,
when so many determined people are willing to make great sacrifices to come to
the bay area and demonstrate excellence, get a good reputation and good
references, build a network?

I hear boo hoo talk from disgruntled middle aged men in restaurants and coffee
shops around the valley and it fucking baffles me. There's more opportunity
here than anywhere on earth, and yet people still grumble that it isn't quite
convenient enough.

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mixmax
It wasn't meant as a rant, more as a business opportunity. I agree that if you
_really_ want to get VC money you should do whatever it takes. I've done so
myself with success (In Europe) and couldn't help to notice that the system is
broken - say the right buzzwords, namedrop the right people and have a slick
power point and your chances are good. It just seems like a bad decision
businesswise for VC's to primarily invest in companies that are referred to
them. They must miss some gems.

There might be a startup hidden in there somewhere. Maybe you could charge to
read through businessplans? Maybe you could crowdsource it?

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rjurney
I don't think there is a more effective vetting system than networking. If you
haven't worked with someone, or with someone who has, up to some degree of
separation, how can you really know if they're worth a crap?

~~~
qu1j0t3
That only covers half the argument ("I am in a better position to judge those
opportunities referred to me"). You still have to acknowledge that there are
good opportunities a VC can't/won't find through the network, or won't
correctly evaluate. "That's life," though. :)

~~~
rjurney
There certainly are. I just think its the most effective method for VCs. Its
probably not for seed stage investment - as Y Combinator has shown.

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mcantelon
tldr version: Cringely submitted a business plan to VCs via their website and
hopes he gets a positive response.

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CytokineStorm
I really can't take seriously someone who posts flash banner ads at the top of
their personal blog. It skewed my whole perception of his article.

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DanielBMarkham
I'm looking forward to seeing how this experiment works.

I find the whole funding conundrum so sad as to be funny -- one of those
things you just have to laugh about to keep from crying.

So let's see, 9 out of 10 ventures fold. The cost for entry keeps going down.
Lots of tire-kickers will submit a business plan no matter how unworkable the
business or how ill-matched the VC.

The response? Better web sites! And secretly even more of a reliance on
networks and following the herd. Better still, up the amount of money they
want to invest keeps going in the opposite direction of the amount that
startups need.

But damn, those websites are looking _awesome_.

