I am gleefully presenting Rick Segal with a better title for the thread he has been pushing at recently, where the economics of Web 2.0-ish companies is eroding the traditional value that VCs bring to the innovation game: New Venture Economics. After a long, long preamble, he gets to his core insight: if VCs aren’t needed for money (based on the new economics of startups), what are they supposed to offer instead?
[from The Post Money Value: VC 2.0 part 2 by Rick Segal]
If you don’t need my money, the blogging world is your rolodex, and you could possibly be snapped up before you require capital which allows me to do my VC thing, what do I offer? I believe there is a different model out there that might work for the Web 2.0 type companies.
That’s my point of disruption.
My working theory is that a “Capital firm” with Esther Dyson, Mark Evans, Shel Israel, Doc Searls, Robert Scoble, Dave Winer, or some combination, might have value that, along side my money, could bring ideas into the mainstream in a much different fashion with great returns for all.
I believe if you come into my office for a 30 minute no harm, no foul meeting and, as part of that 30 minute meeting some combination of the people above giving you some feedback is a priceless piece of capital.
If I can harness that capital in a form that makes sense for the fine folks above as well as me and the start up, well, we’ve got something I think. And the capital of smart technical folks who have build world class systems, etc, etc.
Rick is describing my consulting business, or at least one part of it. Right now, I have a ‘portfolio’ of startup companies — some whose products we can talk about, like TravelPod and SyncPeople, and others that are still in stealth, like 3bubbles (coming soon!) and upper left, and some others that I can’t even name — where I am a strategic advisor to the company, swapping my expertise and insights for a stake in the company, as well as consulting fees. This is the ‘Capital Company’ model that Rick is talking about.
He’s right. It’s happening.