â€The All American Business Shirt†- front, originally uploaded by maurice_flower
It’s rare that “fashion” and “venture capital” ever find themselves in the same sentence, but Howard Morgan at First Round Capital does an excellent job of lending historical perspective to Charles River Ventures’ new seed program in his post “Fad and Fashion in Venture Capital.”
Howard tells the story of ever-increasing venture fund sizes dancing opposite ever decreasing startup capital requirements, which is the standard “venture is broken” mantra, but the additional perspective of VC syndication strategy that he provides is well worth understanding. Arguably, the competition/syndication dynamic is a source of increasing tension in the industry today since there’s such a capital overhang. I’d love to see some statistics that show syndication by % of total deals over time (anyone?).
The more important takeaway for me, however, from Howard’s post, and the thoughtful posts of Fred Wilson and Josh Kopelman on the topic, was a throwback to what I heard from Vinod Khosla at the Always On Innovation Summit this summer: venture investors should be focused on building companies rather than doing deals. Certainly, deal structure matters in order to align incentives and lend investors downside protection. But Fred puts it best: “…we have been rewarded the most over the years when we engage deeply with a company…” Seed stage investors that are engaging deeply are building companies and there’s a lot of upside there.
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Chrysalis invested in September in Chronicity, a seed stage provider of integrative treatment for Attention Deficit Hyperactivity Disorder (ADHD) and related conditions, operating under the name ADD Health and Wellness Centers. The press release is here.
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Matt, thanks for the link. Great blog. I’m going to add it to my feedlist.
Thanks, Chris. Love your work - I’m a sucker for metrics.
[...] (1) drumming up ”startup access” (aka. “deal flow,” but lest we forget, this business is about building companies, not doing deals), (2) evaluating and negotiating investment opportunities, (3) developing and maintaining subject matter expertise and an extensive contact network in your investment sectors, (4) guiding active portfolio companies, and (5) marketing and reporting to both current and prospective investors in the firm. [...]