Anyone familiar with the VC community knows that these people are voracious networkers ‘“ they know all the top area talent as well as the talent in their specialty niches. In addition, many VC firms employ business development experts whose sole job description entails monitoring up-and-coming startups and alerting management to voids, trends and business opportunities they see as promising. Using this knowledge they then produce memos citing the companies best positioned to take advantage and look to do deals.
In a recent article Fred Wilson explains that in his estimation investing in early stage companies (seeding) is actually less risky than later stage investing because the VC has the most input and can really provide clear direction and influence.
Add to Fred’s conversation the fact that many people are saying that VCs are running out of fundable companies due to a shortage on innovative ideas…
My question: why don’t VC firms simply start their own companies? If VCs know there is market demand (they are already employing teams of analysts to make this determination, right?) and if they know (i.e. have access to) the right people needed to assemble a ‘dream team’ best positioned for success and they HAVE the money’ why not be more proactive and just start a company of their own? A hybrid VC model.
Too much work? Not enough diversification?
Maybe some already do and I’m just in the dark’