Quote

If I were to leave and raise a venture fund, I would have to find 10 or 100 LPs. They would all give me a bunch of money, and I would take a percentage of that to pay myself. They would expect me to invest that over the next three years, and they want that money back in seven or eight years.

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.

Venture capitalists are professional money managers. We are provided capital to invest as long as we can return it to our investors with a strong return in a reasonable amount of time. A strong return is three times cash on cash. A reasonable amount of time is ten years max.

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.

We own only a small percentage in Omnivore, but we manage it. It is basically a venture capital fund to help newer enterprises and provide them with the funding they require in their early stages of development.

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.

I've been a customer of the top venture capital firms, so I know exactly what they do and don't do.

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.

Many entrepreneurs, and the venture investors who back them, seek to build billion-dollar companies.

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.