There’s a lot of talk about rebooting or changing the way venture capitalism works. I wonder is all this renewed talk down to this guy?
Scoble mentioned one thing which I suppose is true about software companies:
But today’s world isn’t money constrained. You don’t need much money to build software or services
So, I wonder, what is the biggest reason for companies to seek money? Wages for emlpoyees? Hardware costs? Are there many VC firms in Ireland that will invest in comparitively small amounts, say 100k or do they only want to talk to people who need a few tonnes of bank notes?
The big spend is on people. They draw down the bulk of the cost. So if you invest 100,000 you get two good people for about 6 months with a little overrun for misc. costs like furniture, hardware, office space etc.
This typically means that after 6 months you need to look for more money. Raising money is incredibly time consuming and takes away from the core business. So if you decide to raise VC get as much as you can on the best terms you can and pray when you go back to the well its on something like your own terms.
Wages for employees. Man if i had access to even that money. The things i could do.
A VC fund can’t really make as small an investment as EUR 100,000. It just doesn’t work that way. The overheads and the risk are just too high for it to be worthwhile.
There are some funds that will do less, but they are generally somehow state-subsidized. But the bulk of this level of money has to come from individuals.
I know of a couple of small-scale websites which were financed at one stage using $100k investments; these were typically from “angel investors” rather than full-on VC funds though, and in the US.
One of these became a *very* big deal later on, so it must have been a good bet 😉
[…] Unfortunately, after re-reading the email, nothing I said hasn’t already been mentioned (nearly a year and a half ago). The vital component is the ‘Brain Trust’ as Damien Mulley referred to it. As we’ve seen, despite sitting on millions, Enterprise Ireland can’t give the money away. They’re looking for the big knowledge companies to appear out of a tiny tech-startup eco-system. Damien Mulley had the first post which kicked off this conversation (in Ireland) by highlighting the fact that the traditional VC’s are facing stiffer competition from savy tech entrepreneurs often with not a lot of money, the most famous being Y-Combinator (now Seedcamp in the UK is following a similar model). […]