Fred Wilson on the Future of Venture Capital
Fred Wilson thinks that Venture Capital is changing -- in 25 years, VCs may not have any assets under management.
Last night, Sarah Lacy asked Fred Wilson 'The Thiel Question' - something that Peter Thiel commonly asks prospective investments: "What do you believe that very few people agree with you about."
Wilson's answer was that in the venture capital market, there ultimately wouldn't be a need for VCs to ever have funds.
Today, VCs raise money from Limited Partners (LPs), who trust the VCs to use that money to invest in companies that will have amazing growth over the next 3-10 years and deliver a good return on investment.
The VCs primary value provided is to source and structure the deal and then provide ongoing advice and guidance to nurture the investment. By contributing money to the VC Fund, the LP is simply betting that the VC will be capable of sourcing and structuring deals and then nurturing them to success.
Storing Limited Partner money in their bank account, just waiting to invest it is inefficient for VCs. Instead, VCs should be able to submit, on a platform like AngelList, the investment terms, company overview, and personal commitments. Once it's up, we can easily let the market provide the money ad hoc.
Wilson's right, this future seems logical and inevitable. In fact, AngelList is already starting to successfully provide this type of disruption in the seed investment market via their Invest Online feature.
As a new angel investor, I've joined this market at a very interesting and disruptive time in it's life. As Naval Ravikant would say, "we're witnessing the unbundling of advice, control, and money."
In a world where advice, control, and money become unbundled -- the money will become a commodity chasing those with the best reputations for success.
Therefore, the Fred Wilson of 2040 will want to focus primarily on giving great advice and helping guide the company responsibly from his perch on the board.
Fred Wilson said he thinks this change will happen decades from now, but, it's already starting to happen for very early-stage investing. This won't happen quickly, but expect to see more and more "out-there" experiments.
If you are interested in early-stage investing one day, it's worth noting that building your expertise and brand will matter significantly in the future. It's why entrepreneurs will pick you today and it's why money will follow you tomorrow.
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Despite incredible economic growth, it is not necessarily an investor's paradise.
- China's stock market is just 27 years old. It's economy has grown 30x over that time.
- Imagine if you had invested early and gotten in on the ground floor.
- Actually, you would have lost money. Here's how that's possible.
Moans, groans, and gripes release stress hormones in the brain.
Could you give up complaining for a whole month? That's the crux of this interesting piece by Jessica Hullinger over at Fast Company. Hullinger explores the reasons why humans are so predisposed to griping and why, despite these predispositions, we should all try to complain less. As for no complaining for a month, that was the goal for people enrolled in the Complaint Restraint project.
Participants sought to go the entirety of February without so much as a moan, groan, or bellyache.
- Facebook and Google began as companies with supposedly noble purposes.
- Creating a more connected world and indexing the world's information: what could be better than that?
- But pressure to return value to shareholders came at the expense of their own users.
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