There are lots of ways to make money in venture capital, and there are even more ways to be mediocre. The industry has too much money and too many smart people chasing too few great entrepreneurs.
Sentiment: NEGATIVE
I don't think a lot of people have been entrepreneurial about venture capital.
You know what works in venture capital? A group of incredibly smart, connected people who have the financial wherewithal and risk appetite to make multi-million dollar bets on unproven ideas and inexperienced founders. People who can make decisions quickly, and who spend their time trying to help entrepreneurs make the most of that cash.
So many folks in the venture capital business are sheep that just want to follow the herd. They are momentum investors purchasing highly illiquid investments. That is a recipe for disaster.
Picking winners among the many young companies seeking money is a tough business, even for the most sophisticated investors. Indeed, most professionally run venture funds lose money. For individuals, it's pure folly. Buy a lottery ticket instead. Your chance of winning is likely to be higher.
There's nothing wrong with raising venture capital. Many lean startups are ambitious and are able to deploy large amounts of capital. What differentiates them is their disciplined approach to determining when to spend money: after the fundamental elements of the business model have been empirically validated.
There's almost too much venture capital in India - there are issues with seed capital, but for venture capital, there's a lot money chasing deals here.
The problem with taking venture capital is if you take $5m from someone, it may feel great; you may feel like they're validating your business model. But they're giving $5m out to 20 different people, hoping one of them will be a hit. They don't really care if it's you.
The venture industry is both quite vibrant and quite competitive.
Venture funds get beaten up for not investing in important things. Okay, if you want venture funds to invest in important things, then don't penalize or make fun of them when those important things don't work.
Most startup entrepreneurs unnecessarily spend half their time and give up half their equity in search of funding from angel investors and venture capitalists. Tens of millions of dollars are available to them for free from partners who not only don't want their equity, they don't even want to be paid back.
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