Tagventure capital

Clicktrance: VC edition

1. Wondering what happened to serial entrepreneur Marc Pincus, founder of Tribe.net — the social network I used a lot post-Friendster and pre-Facebook when I was more in the SF Burning Man world.

2. Found he sold the software and engineering of Tribe to Cisco in 2007, which I vaguely remembered, and started a casual gaming company named after his beloved, now-late dog: Zynga.com

3. Zynga just raised $29m on top of the $10m from last year! Who was involved in that? Kleiner Perkins, IVP, Union Square Ventures, Avalon Ventures, Foundry Group. Foundry Group? Who’s that?

4. Turns out the Foundry Group is a VC firm in Boulder doing a couple interesting things – for example, trying to accelerate the development of its native Boulder as a startup hotspot, something I’d like to see more of in Vancouver.

5. The Foundry Group also has a great series of blog posts laying out its thematic investment philosophy. In a nutshell, they are focusing on startups that solve problems in a couple different areas: Human-Computer Interaction, Implicit Web, Email, Glue, and Digital Life.

6. What time is it? Time to get back to work.

The Twilight of Venture Capital?

Former Enterprise Partners VC Bill Stensrud bows out of the business, saying for all to hear that the entire venture capital industry has outgrown its usefulness. With charts of dwindling IPOs and the discussion of a lack of new tools, I thought he was telling us that innovation in 2009 was dead, or that the VC model was simply broken. It’s actually a more interesting argument, though.

The burst of invention and commercial success which was initiated by the invention of the transistor has run its course…The rapid evolution of new tools is over and will not resume until and unless there is another fundamental technology innovation comparable to the transistor.

I know of no example of an industry which conducted an orderly and systematic downsizing when the opportunity it addressed disappeared or radically changed. We can look around at the auto and recording industries for recent tragedies. The Venture Capital industry is no exception. Instead of recognizing the handwriting on the wall, VCs are inventing new places to put money and trumpeting the “opportunity” they represent.

Stensrud’s argument is that the VC industry was a sort of business “design pattern” that grew in parallel with the invention of the transistor and its many follow-on technologies in the 1960s. Now in 2009 the disruptive innovation that this match spawned — virtually the entire technology industry — is over. The technology industry has grown to be a cornerstone of the US economy. The disruption was successful and the disruptors have become the establishment. The VC industry scaffolding that helped to build the technology industry is still standing, however, and is completely overkill for the minor innovations of the now established technology industry. And there are no new promising technologies comparable to the transistor on the horizon that merit that apparatus.

While I agree with his point about *fundamental* innovation from the transistor probably having run its course, I don’t have the same pessimism about the VC model or the absence of new tools. Yes, right now there may be too much money running after too few deals. Yes, clean tech may be over-hyped as an opportunity. It is interesting to think about the venture capital industry as a design pattern that complemented the dominant technology of its time and is thus unsuited for today’s new technologies, but I would be surprised through if the industry did not a) reconfigure in size and scope for different innovation and technology commercialization challenges, or b) simply turn to new fields where it could provide a repeat performance of past success.

In 2009, there is probably more fundamental research going on now than ever before, and many industries (and future industries) that could yet benefit from that VC industry-creating scaffolding. There is surprisingly no mention in Stenrud’s entire post of the life sciences, a non-transistor-based industry which has certainly been accelerated by venture capital over the past twenty years. In fact, I would bet that the life sciences are where those missing “new tools” for the next half-century of disruptive innovation are going to emerge.

via paul kedrosky

RIP Good Times: Sequoia on startup strategy

Data- and advice-filled slide deck from Sequoia Capital on what steps startups should take to survive given the financial crisis.

via A VC

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