Is the VC Old Boys Network Dying?
The VC “old boys network” is not dead yet but it just might be stone dead in a moment. This business is no longer just about relationships—strategy and tactics are now critical too. Why is VC changing? Competition. The world at-large and VCs alike are prone to think of financial services providers (such as venture capital firms, private equity firms and hedge funds) as a special class of product or service immune from the normal laws of business physics, but this just isn’t the case. In fact, VC resembles a nascent, relatively immature industry that is (finally) growing up—after all it is only sixty years old!
How is VC changing? Well it is changing just like any old industry might when competition is introduced. Let’s look at some examples - here I have paired some characteristics of industrial competition & evolution with VC-specific examples:
- Scale / Professionalization (destroying the “mom & pop”) - Super angels (SV Angel, 500 Startups)
- PR & Marketing - Fred Wilson, Brad Feld, Mark Suster, Chris Dixon
- Co-Branding - KPCB iFund (+Apple)
- Specialization - IA Ventures (sector/theme), First Round (stage)
- Globalization - Walden International, Canaan India, Tiger Global, DST, the rise of NYC
- Franchising - DFJ, TechStars
- Strategic Investments - TechStars + RRE Ventures/Foundry Group/et al; RRE Ventures + Betaworks; YCombinator + DST
- Vertical Integration - NEA, Accel
- Transparency and Efficiency - AngelList, TechCrunch, TC Crunchbase, Twitter, blogs
- Salesforce / IT - TCV, Accel, Bessemer, etc. (use CRM software and employ armies of analysts)
In other words, VC is changing and it’s geting more competitive. Relationships in this business will always be critical, but strategy is now a must. Just like the startups that VCs invest in, venture firms themselves must be careful to set strategy for the years to come. Those firms who evolve the fastest (and in the right ways….) are most likely to survive.
Have any examples I missed?
