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Early Stage Venture Capital Chasing Lighter Faster Companies

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Before we get into lighter and faster early stage venture capital some career advice.

When my Dad gave me career advice he said … this is what you do:

  1. Get an Accounting Degree
  2. Join a Public Company
  3. Work your way up to Managing Director
  4. Be rewarded with a job for life, a Jaguar car and a gold watch

Doesn’t fit Gen Y. Doesnt fit anywhere anymore.

Same goes for investing in a company and waiting for it to start paying dividends.

Things happen so much faster now. Just the mere comparison of Linkedin and private market networks like Second Market, Angelsoft and ASSOB with a rolodex, handwritten letters and bankers show that information, money and contacts move so much faster now.

Entrepreneurial investment opportunities can race around the world in seconds, and so can the private equity funds that are to be invested in early stage companies.

Companies seeking early stage venture capital, and those investing private equity do so in the following environment:

  1. Opportunity distribution via the internet means that companies may only last a year or two before being swallowed up. Shorter life spans.
  2. With virtual working and offices, outsourcing possibilities for production, computer equipment, software programming, testing facilities and a myriad of other services, up front cash requirements are much less than previously required. Less cash needed.
  3. Due Diligence includes Google. Fifteen years ago, moving to a new town and starting up a new business enabled the shedding of past misdeeds. With Google your past follows you as a private equity investor, a capital seeking entrepreneur or as a facilitator of raising capital. Everybody knows.
  4. Who invests has changed! With less cash needed many companies seeking early stage venture capital are no longer attractive to Venture Capitalists. In fact early stage companies may never scale up to the size suitable to an IPO before being swallowed up. Size matters.
  5. Accelerators, incubators and inovation centres like Y Combinator and Techstars are mentoring at the pre-funding stage so that investor ready startups emerge seeking capital compared to businesses in the past when investor readiness was only on one side of the table. Investor ready.
  6. The networked and offline / online environments including Angelsoft, ASSOB and Techstars mean that several investor types can be involved in the evolution and growth of a business and the capital raising process. More Investors.

In summary, startups have shorter lives, they require less funds than previously, its easy to find out if either the investors or the entrepreneurs have a shonky past, private equity from platforms like ASSOB and Angelsoft are often a better match than venture capital and there will be more rather than fewer individual investors.

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