Tuesday, September 4, 2007

Evil Google vs. Pleasant VC's ???

Businessweek writes crap this week about Google taking share out of the venture investing marketplace.

There are two things I take away from this article.

1. Corporations players are investing more money into technology, software and infrastructure.
2. VC's have more competition.


We have seen over the years Intel investing in many start-ups - I think they've invested over $1.3Billion over the years. Motorola is investing quite a lot too. Now Google is entering the game.

This I do not see as much of a threat to angels or early-stage investment groups. The article articulates that goog has invested in four start-ups with a range of $500-800k. Perhaps they have some first-rights for acquiring these companies at a later stage, but the fact remains that a couple of major players investing in a hand full of start-ups will not significantly shift how start-ups find funding.

VC's are not going anywhere fast. The DFJ's, Kleiner's and Highland Capitals of the world will remain the de facto sources for investment. Start-ups should include corporate players like Google in their tours of Sand Hill Road, but that is not to say that they should exclude VCs. The day that entrepreneurs abandon VC's altogether is the day our industry is dead, but until that time, I firmly believe that corporate venturing will not have a significant negative impact on deal flow or sourcing.

2 comments:

Mukund Mohan said...

Kristin,
I agree with your point, but your message comes off as partisan and skewed. I know you are a VC so you will have that perspective, but a more thoughtful and actionable post would be something to the effect of:
1. 3 reasons why entrepreneurs will still choose VC firms.
2. Top 3 things you will NOT get by only taking money from a corporate like Google
3. 5 reasons why a dollar from a VC firm is more value than a corporate venture dollar.

Kristian said...

Mukund,

I too agree that a more constructive note could have been constructed by me.

There are many reasons why start-ups will continue to use VCs. Mainly I believe its their understanding of a businesses developmental cycle.

VC's make their money by investing in companies that they can help out, either through their own past experience (as entrepreneurs) or as connectors - connecting the entrepreneurs to their (the VC's) network of successful companies/people/engineers.

Perhaps I will do a follow up on this topic soon.

Thanks for reading.

KLH