Fallen VCs
from the who-says-they-were-idols? dept
If you read Techdirt often enough, you’ve seen my complaints that VCs haven’t taken any of the blame for all the dot com hype (and subsequent collapse). I don’t mean to place all the blame on them, but I do think they were basically a big pump-and-dump scheme at times, and would push companies way too hard into IPOing, without giving any thought to building a real business. Now, Fortune has an article about how VCs are now fallen idols for all the stupid investments they made. It has a few quotes from VCs who messed up. However, for the most part they just talk about how they made stupid investments, and not about what they did to some of the entrepreneurs and companies they invested in. The article also points out that it looks like the same VCs are still making the same mistakes in other areas (such as optical networking). I spent yesterday at a conference where there were lots of VC panelists, and the thing that surprised me most was that none of them seemed to think they had done anything wrong in investing in 20 different pet companies. This is not to condemn all VCs. I think venture capital is a very useful part of the economy, but I think they got carried away over the last few years, and helped pump up the bubble quite a bit.
Comments on “Fallen VCs”
No Subject Given
i don’t think it’s that hard to convince people to come up with ideas that sound catchy and are easy enough to build on the web in the hopes of going public when you hear about the success stories that have cropped up within the last 5 years. a lot of the blame could probably go to investment banks for being shortsighted enough to actually underwrite these businesses. and then there are those wonderful ads “After the IPO” (nokia or samsung??) that illustrate our culture, period. “Oooh, if we ever go public i’m gonna get a ____ ” is something i’ve heard from people. i don’t think they were saying that out of pressure or ill-advice from VCs. “Why don’t you think of something to do and go public or something?” says a parent. i don’t he/she’s ever talked to a VC. so, VCs “invest” in companies, and i don’t discredit the argument that they certainly will push for the IPO, but i think everyone has a stake in the blame here.
Re: No Subject Given
No, that’s a good point. The culture definitely got everyone into it. My complaint is mainly with VCs who took what were promising business ideas and destroyed them. There were plenty of good business ideas that VCs swarmed in, painted pictures of grandeur for the entrepreneurs, and then took control, and realistically blew the companies up too big. Once VCs take control of a good company, they often don’t push for what’s best for the company, but what will make *them* the most money the fastest. That’s my complaint.