Creating a new venture requires a lot of attention and consideration. Each venture has its unique features and twists. What comes to the funding structure one has to appreciate the needs of the business and adjust the financing accordingly. Not the another way around or force the old formula for a case that is not fit for it.
I regard VC as a special case for a funding - not the norm. In many cases one do not need VC money. It just don't simply make any sense. Either the growth potential is too small or the funding requirements too limited for a serious VC to get interested.
On the opposite spectrum are the cases that are very lucrative and require capital injection but still are not an ideal for VC funding from owners' perspective. Here the threshold is the usual VC mode and its consequences. Bell curve works for VCs as well and this is the problem here. Most of the VCs are not innovative. They are stuck to their own business development formula mechanically and are not adjusting it to the case. This is a problem if the case does not follow the regular requirements and needs. One can easily turn a superb case into a mediocre lukewarm venture by poor case handling and management. VCs have the force to alter cases according to their likings if they desire so. Only few are sensitive and clever enough to use their power wisely. Ruining is way easier than creating.
Between these two opposites the VC model works nicely if one knows the name of the game and is willing to play according to the rules and risks involved.
Posted at March 14, 2005 09:37 AM | TrackBack