The easiest way to raise a new fund is to ride the coat-tail of Apple or Facebook, because neither thesis can possibly be questioned by Limited Partners.
Prominent Venture Capital firm Kleiner-Perkins (KPCB) shows off its lack of entrepreneurial vision with its reported upcoming new fund in a string of previous LP entrapments. First green-tech, which we predicted a long time ago does not yield VC vintage returns. Then the iFund, for the creation of $1B companies from ASPs (average sales price) less than $10 (really?) to a social fund with Facebook, which companies at any point Facebook can choose to displace or disable (really!), to now a Cloud fund for technology utilities to appease the many technology laggers who have a hard time competing with Apple (desperately). Do none of the LPs realize that the risk of investing in technology is not technology?
But in the end Limited Partners won’t hold VC firms accountable to sticking to the Private Placement Memorandum (PPM) thesis, as long as the firm still creates some meaningful return from it. And when a VC firm manages this many concurrent funds, its large investment networks have enough deal diversification to make any investment that walks in their door fit one or more of the available PPMs. Lack of accountability to the original thesis in the PPM is the outcome of a Venture Capital demi-cartel, the opposite a free-market of investing with optimal entrepreneurial discovery would endure.
I continue to be amazed by the games VC firms play to stay in the game, that deflate not propel the opportunity for disruptive innovation. And that is why I dare challenge the intentions of the VC gods.
P.S.: From Paris with love.
- The risk profile – not money – determines what innovation can be discovered. — Georges van Hoegaerden - September 16, 2014
- An outlier knows no precedent. — Georges van Hoegaerden - September 9, 2014
- Losing VC money is not our biggest problem - August 11, 2014
- The Long of Facebook - August 7, 2014
- ‘Innovation’ without renewable socioeconomic value is (government) sponsored bank-robbery of society. — Georges van Hoegaerden - August 7, 2014
- Freedom stripped of its paradox is no freedom at all. — Georges van Hoegaerden - July 25, 2014
- 15,000 views on The State of Venture Capital - July 23, 2014
- Triple Threat Founders - July 20, 2014
- If we want to inspire the world with our spiritual leadership, we must stop selling lies to unsuspecting greater-fools. And lead the world by example, with new rigors of excellence we first and successfully apply to ourselves. — Georges van Hoegaerden - July 19, 2014
- Has Venture Capital Changed? - July 15, 2014