riWidget.init({"user":{"display_name":"marc@dangeard.com","id":"1P1PzgM7zpn","comment_count":255},"comments":[{"reference_points":[{"uri_id":"CO9RONEZFB0","references":[{"type":"text","path":"\/\/*[@id='content']\/div\/p[3]\/text(0,229)","text":"So let me open this discussion up and pose the question: what DO B-schools and E-programs teach about venture capital? And I hope this can also stimulate a related discussion around what SHOULD be taught in a course on financing.","id":"7P5YvOHUOZ3"}],"uri":"http:\/\/www.sramanamitra.com\/2010\/03\/05\/entrepreneurship-education-what-do-b-schools-teach-about-venture-capital\/comment-page-1","title":"Entrepreneurship Education: What DO B-Schools Teach About Venture Capital? | Sramana Mitra on Strategy"}],"depth":0,"text":"What B-School should teach about VC funding is how it fits in the overall picture, which is that it is only an option for a very narrow group of entrepreneurs.\nA few things to realize:\n- VC will tell you that when they look at 1000 business plan in a year, they talk to 100 entrepreneurs and they invest in 10. They also admit that out of the 10, 1 will make it really big, 2 or 3 will be good deals, and the others are just ok, or maybe loosers.\nSo if you choose the VC route, you should be aware that you are getting on a path where only 1% of the entrepreneurs make it, and once you get financed, your chances of success are still limited.\n- If you look at the top 500 fastest growing companies, a list published once a year by Inc Magazine, you will see that only 6% of these top 500 fastest growing companies were financed by VCs. And if you look at the top 5000, then only 3% were financed by VCs. Again, if you take the VC route, you have to be aware that your chances of success are slim.\n\nOn top of these facts, there is also another reality that should be taught in B-School: VCs will get the biggest share of what you build, so going that route is also not the best way to create value for yourself. There are posts on this topic on your blog, so there is probably no need to add too much. But entrepreneurs have to remember that when the VC sells a company, they get the money first, then employees, then all debts are paid, and then what is left goes to common stock, to be then split between early investors and the founder(s). It is not clear how much you will be left with...\n\nFinally the last thing that should be taught in B-School is that if you are an investor, VCs are not a good option for you either. A study of over 1300 firms has shown that on average the return from VC investments is only S&P -3 points after fees. So much for "high risk high return".\n\nOnce all this is said, it is always good to teach VC as an option, because it may work in some cases, and as long as you know what you are getting into all is fine.","has_flagged":false,"rating":null,"reply_count":0,"id":"AIK72uyVo5K","created_at":"2010-03-12T05:10:00+00:00","category":0},{"reference_points":[{"uri_id":"D5M2V2m2GDW","references":[{"type":"text","path":"\/\/*[@id='lingo_span']\/p[2]\/text(77,424)","text":"Most incubators use funding as a success metric, which is a somewhat flawed criterion. Numerous businesses should operate as organically grown, self-sustaining businesses--bootstrapped, without external financing. For them the goal is to achieve customer validation, not financing. Yet if the incubator uses financing as its success metric, then it will force inexperienced entrepreneurs into an unnecessary financing round.","id":"BxEGsI4-mcS"}],"uri":"http:\/\/www.forbes.com\/2010\/03\/10\/job-creation-entrepreneurship-intelligent-technology-incubators_2.html","title":"An Underused Tool For Job Recovery - Forbes.com"}],"depth":0,"text":"One problem with incubators is their own economic model. If they are just cheap real estate, their business works, but it does not work for entrepreneurs. And if they are more than real estate, who pays for the coaching? and can incubators really be profitable, or at least sustainable?\nTypically the ones that I have seen work today or either working with VCs, and provide perceived value (back to your comment on funding) through these connections. Or they are supported by local organizations, but would not be sustainable without grants. And even these tend to push startups towards funding sources, because this is what everybody seems to think is most needed for startups.\nOne model that I am experimenting with (and seem to work so far) is what we are doing at Entrepreneur Commons - http:\/\/www.entreco.org, which can be considered to be a virtual incubator. No real estate cost, and the value is coming from peer-support meetings at local chapter. Hopefully we will see many more Entrepreneur Commons chapters across the US and other countries (we have 2 chapters in France), because the value of the network is real.","has_flagged":false,"rating":null,"reply_count":0,"id":"2o3qAMJ_Ae_","created_at":"2010-03-12T00:40:57+00:00","category":0},{"reference_points":[{"uri_id":"AWxKi_DL7Es","references":[{"type":"text","path":"\/\/*[@id='articlecontent']\/p[2]\/text(0,169)","text":"The state of entrepreneurship education and training in U.S. schools has declined sharply, with a 2008 survey of experts rating it barely half as good as it was in 2005.","id":"EkXRHdeDW80"}],"uri":"http:\/\/www.inc.com\/news\/articles\/2010\/03\/report-shows-US-entrepreneurship-education-suffering.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+inc%2Fheadlines+%28Inc.com+Headlines%29","title":"GEM Report: U.S. Entrepreneurship Education Lags"}],"depth":0,"text":"Clearly there is a need. One way Entrepreneur Commons is helping with entrepreneurship education is through peer-support, and through the Entrepreneur Commons Academy, a global online peer-learning platform for entrepreneurs - http:\/\/www.entreco.org","has_flagged":false,"rating":null,"reply_count":0,"id":"F6dWZg6GUkB","created_at":"2010-03-09T18:02:02+00:00","category":0},{"reference_points":[{"uri_id":"7AFbBhESShO","references":[{"type":"text","path":"\/\/*[@id='article_story_body']\/div\/p[2]\/text(0,328)","text":"Venture firms are struggling to raise new cash, hampered by poor investment returns and a difficult economy. Last year, 125 venture funds in the U.S. collected $13.6 billion, down from 203 funds that raised $28.7 billion in 2008 and down from 217 funds that raised $40.8 billion in 2007, according to data tracker VentureSource.","id":"1IyBo9q26oZ"}],"uri":"http:\/\/online.wsj.com\/article\/SB10001424052748703915204575104221092909884.html","title":"Venture-Capital Firms Caught in a Shakeout - WSJ.com"}],"depth":0,"text":"Venture Capital is not the best way to finance innovation, and despite the well advertised success the returns are not that great. No wonder the money flow to VC firms is drying out, this is actually a good thing.","has_flagged":false,"rating":null,"reply_count":0,"id":"BDxvgGKjZ3_","created_at":"2010-03-09T17:54:29+00:00","category":0},{"reference_points":[{"uri_id":"CdE_CcFAuIg","references":[{"type":"text","path":"\/\/*[@id='lm_8cdf716f-2f79-4624-922f-17ffff9ba480']\/div\/div[4]\/div\/div\/div[2]\/p[2]\/text(268,363)","text":"He kicked off the discussion, which included venture capitalists and economics professors, by explaining the importance of nurturing small business entrepreneurs. He said research has shown that most new jobs are created by new small businesses, and promoting these entrepreneurs is of the utmost importance to improve the employment rate, and economy as a whole.","id":"DAiYQfPhiZH"}],"uri":"http:\/\/www.unleashingideas.org\/usa\/blog\/$blog\/2009\/11\/19\/investors_and_professors_talk_innovation_at_world_bank?source=ActivityLog","title":"Investors and professors talk innovation at World Bank - GEW USA - Blog"}],"depth":0,"text":"Nurturing small business entrepreneurs is of the utmost importance to improve economy. But the current system is not optimized to do this. The purpose of Entrepreneur Commons is to change this situation - http:\/\/www.entreco.org","has_flagged":false,"rating":null,"reply_count":0,"id":"99eZ2NQhZo","created_at":"2010-03-09T15:11:58+00:00","category":0},{"reference_points":[{"uri_id":"F6kOfHGn4o7","references":[{"type":"text","path":"\/\/*[@id='post-144031']\/div[3]\/p[4]\/text(112,975)","text":"The issue is that the best ideas often occur on the lowest levels, as much because those levels are highly populated as that they are the youngest and freshest, and these ideas must trickle up. That is, from what I understand of Microsoft (very little), in fact how it was designed. Good projects gain members and budget by degrees and snowball until they reach product status. The idea is that the whole process is smooth and practically automatic. And isn\u2019t it pretty to think so? Unfortunately, when you factor in the inevitable corporate friction, you\u2019re looking at years of development for a product which may or may not even be worthwhile. By the time the sausage is made, everyone has already moved on to quail. If there were an easy solution to this I\u2019m sure everyone would take it, but Google\u2019s seems to be the best approach when you\u2019ve got a steady supply of golden eggs, as both they and Microsoft do in the form of advertising and enterprise revenue respectively.","id":"6LHDAA5e3OX"}],"uri":"http:\/\/www.crunchgear.com\/2010\/03\/06\/its-time-for-microsoft-to-turn-itself-upside-down","title":"It\u2019s time for Microsoft to turn itself upside-down"}],"depth":0,"text":"In any big corporation, internal politics and the constraints built into the system kill innovation that could come from the lowest levels.","has_flagged":false,"rating":null,"reply_count":0,"id":"A1lbsmiL704","created_at":"2010-03-07T05:46:50+00:00","category":0},{"reference_points":[{"uri_id":"5zAQIc2OIux","references":[{"type":"text","path":"\/\/*[@id='entry-18574']\/div[2]\/div\/text(0,407)","text":"What a week for StatusNet, the open-source, microblogging service that serves as the foundation for identi.ca, one of the first services to emerge as a focal player in the movement around the real-time Web.\n\nLast week, the company launched StatusNet Enterprise Network, a microblogging service with a support program for the corporate market. Initial customers include Motorola Corporation and Canonical Ltd.","id":"CPeLujv7Mux"}],"uri":"http:\/\/www.readwriteweb.com\/enterprise\/2010\/03\/will-statusnet-be-another-open.php","title":"Will StatusNet Be Another Open-Source Star in the Enterprise? - ReadWriteEnterprise"}],"depth":0,"text":"Open Source software, scalable architecture, with a business model. An excellent start, this is brilliant!","has_flagged":false,"rating":null,"reply_count":0,"id":"9UiziJ1VHol","created_at":"2010-03-06T16:34:26+00:00","category":0},{"reference_points":[{"uri_id":"EbyekQpLhJs","references":[{"type":"text","path":"\/\/*[@id='content']\/div[2]\/p\/text(0,237)","text":"An open letter from Fred Meyer, the vice-commodore of Alinghi's yacht club Societe Nautique de Geneve (SNG) to Principal Race Officer Harold Bennett has questioned whether the second and defining race in the 33rd America's Cup was valid.","id":"1jUIWO5JV2c"}],"uri":"http:\/\/www.yachtingworld.com\/performance-world\/news\/445299\/was-race-2-of-america-s-cup-valid","title":"Was Race 2 of America\u2019s Cup Valid? | America's Cup News from Performance World | Yachting World"}],"depth":0,"text":"America Cup: it ain't over until it's over. More legal battles coming?","has_flagged":false,"rating":null,"reply_count":0,"id":"3Lfq_s0vLaj","created_at":"2010-03-05T16:50:28+00:00","category":0},{"reference_points":[{"uri_id":"DN6qxbgkJnw","references":[{"type":"text","path":"\/\/*[@id='content']\/h2\/text(0,60)","text":"Basics of Entrepreneurship: Dealing with Venture Capitalists","id":"1wfYnv0lGYH"}],"uri":"http:\/\/knowledge.wharton.upenn.edu\/article.cfm?articleid=2444","title":"Basics of Entrepreneurship: Dealing with Venture Capitalists - Knowledge@Wharton"}],"depth":0,"text":"And again VCs presented as a normal step in the process for entrepreneurs. Wrong! Bootstrapping is the normal process.","has_flagged":false,"rating":null,"reply_count":0,"id":"9_E_2K-Ew-E","created_at":"2010-03-03T23:03:46+00:00","category":0},{"reference_points":[{"uri_id":"6OoJmAMcD-E","references":[{"type":"text","path":"\/\/*[@id='user_2863271']\/h2\/div\/text(0,8)","text":"mdangear","id":"FePhmHElK98"}],"uri":"http:\/\/twitter.com\/mdangear","title":"Marc (mdangear) on Twitter"}],"depth":0,"text":"Just reached 1000 followers on Twitter today. Is this good, or is this bad?","has_flagged":false,"rating":null,"reply_count":1,"id":"9-yCZ8rqwAZ","created_at":"2010-03-03T21:42:50+00:00","category":0}]})