Making Progress

The Next Media Ventures Blog

A Venture Capital Reflection

Bill Gurley’s, What Is Really Happening To The Venture Capital Industry?, is a pithy and direct assessment of the state of venture capital today and is a must read. Period.

Venture Capitalist

One of his predictions is that many VC companies will not be able to raise new funds and go out of business. Given the state of economies and investors around the world, this is a safe bet. There have also been comments made across that web that the VC business will go back to the way it was in the 70s and 80s, meaning smaller investments. Sure, there’s pressure to move in that direction as well.

However, lean times also cause reflection. What’s important? What matters? What must absolutely happen in order to make a business – a real profit-making, sustainable business? What must absolutely happen in order to continue funding those startups that become businesses? With investment monies becoming scarce, VCs should be reflecting on their revenue models just as much as entrepreneurs.

There could be other tools introduced into the venture capital funding models, tools that lower investor risk, shorten the funding cycle and secure liquidity for the investor.

The financial world has created popular funding variations in every decade – from junk bonds to IPOs – with the common result being that investment money is found and used to fund new business.

Its time again for the financial wizards to assess the current situation and invent/create/vary the financial tools needed to find and gather investment money. It’s also time for venture capital firms to reassess their own approach to funding startups and find new ways to help entrepreneurs create profitable businesses while also creating a better return for their investors.

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