Don't mess with us - we are the VC mafia Wednesday, February 28, 2007
I was greatly amused by this post from Business 2.0 Beta with his take on VCs and the fact we're a little like the mafia.
His [tongue in cheek?] conclusion
Forget all the nonsense about providing capital for growth and creating great companies. Today's venture capital is just an elaborate protection racket, making sure no one breaks your startup's virtual kneecaps. And the best part? It's completely legal.
- At 5:18 PM, Paul Lomax said...
Any plans to break Howzat Media's legs? :-)
They just invested £500k in TrustedPlaces...
- At 5:29 PM, Mat said...
John. This was a great post. Thanks for the link.
Tongue in cheek? Well at the heart of the post is a nugget of truth. The poster-child acquisitions of the web 2.0 era have been driven by insider relationships. Look at how many of the start-ups have board members or investors in common with their buyers. As long as these deals can't be too obviously labeled as sweetheart deals, then what's a billion or so between friends.
"Pssst! Buy my portfolio start-up and I'll let you in on my next fund!"
- At 8:02 PM, John Wilson said...
Paul, I saw the Trusted Places news which is where sub consciously the £500k number came from. You may recall that we were with Sokratis Papafloratos, co-founder of Trusted Places at the Geek Dinner last week. He came on with me to London Geek Girl Dinner and I thought he seemed a bit flush with cash. Now I know why! :-)
- At 8:07 PM, John Wilson said...
Mat, you're right - having connected VCs/investors involved is always going to help simply because one of their jobs is drumming up interest from potential buyers and more importantly, making sure there is competitive tension when it comes to a sale.
It's clearly easier if the VC has good connections to casually drop hints to their "friends" and make enquiries as to their interest, without it constituting a "For Sale" sign over the business.