Venture capitalists have long pointed entrepreneurs to areas, sectors and industries they favor: usually labeled things like “IT” or “semiconductors” or “wireless”, they do that to manage leads, filter out irrelevant opportunities and optimize their deal flow (even though, most will tell you that unless you get a reference to a VC, they won’t even really read your proposal, unless it’s related to a portfolio company or a startup they’re looking at funding, at which point you can bet that they will send your material around).
But nowadays, with investing leveling off and IPO exits being non-existent, some VCs are taking it a step further by outlying specific product and service ideas they’re looking at funding: YCombinator’s Paul Graham does just that in a recent post, which calls for surprising and less surprising things they’d be looking at funding.
We’ve seen articles like this, but usually it’s a magazine or website that asks a handful of VCs or executives. This one comes to mind, called “20 Smart Companies to Start Now”, which Business 2.0 published back in 2006, when Web 2.0 was starting to become all the rage.
But, this is one of first/few times where an investor outright calls out projects, which makes it both surprising and refreshing. I think this is a sign of the times: there are a few good things about VC investing, but there are many more bad things. VCs have to change, and maybe seeing them solicit for opportunities is a welcome change. I don’t know. I still see many smart ideas and entrepreneurs go unfunded. I get 1 entrepreneur each day emailing me for funding or for a referral. I try to help, but then I wonder, why are those actually paid to identify opportunities and invest in ideas not doing more of this kind of thing?
Maybe they’re all busy blogging. I am kidding on this part, I think VC bloggers are net-net, a positive… provided they blog regularly and are not doing it as a passer-by… sort of like being a tourist VC, I guess.
All to say, I give YCombinator and Paul Graham credit for this. Successful entrepreneurs tend to advise new ones that you should establish your company where you can hire talent, I tell them, unless you have the dough to finance it yourself, set up your company where you will be geographically close to capital you can obtain (who wants to get on a flight these days, after all, if you don’t have to)…
Like most VCs, YCombinator is not ideal nor is it perfect, it’s not even a VC per se, but an incubator… but for really young and idealistic entrepreneurs, it’s a pretty neat idea… and this email is one more manifestation of that.
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