Today’s Question
What small-business owners think.
Most small-business owners never seek venture capital, writes Pamela Ryckman in an article we’ve just published, but for those who do, it can feel like a deal with the devil. Venture-backed companies are expected to grow quickly, and their boards can impose rigorous controls, audits and metrics. A founder who takes venture capital gets the opportunity to grow but also risks losing control of the company. One way entrepreneurs mitigate the tension in the relationship is to work with venture capitalists who may have more patience during the company-building process — because they have been through it themselves.
Such entrepreneurs-turned-investors have become more common recently, even as the venture capital industry contracts after years of lackluster returns. Insiders see this as the industry righting itself after a bubble, suggesting that venture capital has gone back to its roots now that many M.B.A.’s lured by giant paychecks have exited the field. They believe venture capital is once again attracting the right mix of former founders and operators who are truly passionate about nurturing companies and who have hard-won insights that can help founders succeed.
“It’s back to the future,” said Kate Mitchell, a managing director at Scale Venture Partners and former chairman of the National Venture Capital Association. “Silicon Valley was founded by a balance of entrepreneurs and finance types. The bubble brought a huge influx of people, but the tourists have gone home and the ratio is back to normal. A lot of the new venture firms are led by former entrepreneurs.”
What do you think? Do entrepreneurs make better venture capitalists?
Article source: http://feeds.nytimes.com/click.phdo?i=9436c703ecdf4c447ac6dcc741f47662
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