Over the weekend, a discussion blossomed(thanks to Dave Winer) about the future of Venture Capital. Then everybody else jumped on board. Scoble, Doc, Ensight, CrunchNotes and Nolan just to name a few.
While they all make excellent points. I think they all missed an important idea. Every last one of them talks incessantly about new ideas. About how there are so many good ideas out here in the ether that never go anywhere because of the current structure of VC. They all make excellent suggestions for the future of VC and the changes that should be made.
So what did they miss?
A VC structure that I really wish existed… And I don’t think that I’m alone. Winer talked about the integration of users as shareholders in the VC firm, but why not take it a bit further and make the users the shareholders in the startup itself? Sure there is more risk, but if you are a user who wants more hands on control over where your money goes… Why not invest yourself. Of course, not everyone has a couple of million sitting around waiting for a venture to invest in, so we have to conglomerate. That has been the traditional role of the VC firm. Conglomeration of the money. Problem is that usually when the VC firm makes money off of their investment, the user doesn’t really see much of that money. Problem being that the profit usually goes to the staff of the VC firm and to research and other various pet projects.
So how do we accomplish this? I envision the Ebay/Craigslist of VC. A bulletin board where the the owners of the venture can post their venture with the investment opportunity and offers. Where the users can browse and can invest at will. Somewhere where a white collar joe schmoe like myself could go and invest $1000 in the next digg. The risk would be great for me, but there would be a lot of smaller ventures that would receive funding because their wasn’t a VC firm inbetween filtering what was worthy of investment. Sure they are the experts, but even experts mess up once in a while.
Perhaps a social rating system that would allow the users of the bulletin board to rate the venture? The better the rating, the better chance of not losing your money?
I don’t imagine that this would be something that is forthcoming. It takes Dave Winer‘s ideas a little further and would give the users he mentions the ability to share in some of the raw returns that traditionally, only VC firms have gotten.
Update: Even more conversation on the broken VC Model. Anne 2.0 , EarlyStageVC , Message , Techdirt, Kedrosky, Dodge, A VC Just to name a few more…
Update 2: I’ve posted a new post that more clearly explains the Ebay/Craigslist idea, read it here.