I cannot stand the words in the announcement of the upcoming IBF Venture Capital Conference because they are false and misleading. Not just to entrepreneurs but Limited Partners as well. Now Venture Capital pretends to care about entrepreneurs and innovation (rather than about their fortuitous role in it, and they may), while none of its actions prove it is self-critical. Despite negative 10-year IRRs.
I am not sure who comes up with these promising descriptions, but my suspicion would be the chair conference (Dixon Doll and cohorts). Here is IBF’s mission statement (in grey boxes) for their upcoming event on June 7-9th in San Francisco.
I cringe and need to break them down.
Raising The Bar in an Era of Innovation! We all know venture capital is rooted in the spirit of investing in opportunity. The U.S. has always been a dominant force in fostering world innovation, and Silicon Valley’s position of being the heartbeat of entrepreneurship remains true.
Very accurate, the U.S. entrepreneurial capacity is undeniable (however, more than 74% of IPOs are now outside Silicon Valley proper).
However, in recent years, technology disruption and globalization have challenged venture capital’s greatest skill: transforming ideas into marketable and lucrative products.
Utter nonsense. Venture Capital, through collusion and excessive syndication, has eroded itself to subprime with equally subprime returns. The best practices of Venture Capital have failed to produce returns, as corporate innovation thrives during the same period.
Further, America has been acutely conscious of a changing world, as economic crashes and educational concerns linger. Global standards are rising, and with America’s growing anxiety, pressure has increased for the VC community to continue superior performance and maintain competitive edge.
Nonsense. Since when are the actions of Venture Capitalists that do nothing but distribute money from others (Limited Partners), an analogy or a trendsetter to the United States as a whole. The pride of this country is production, not finance. Venture Capital arbitrage by way of its artificial stronghold on innovation has because of its negative ten-year performance demonstrated it is not what the United States stands for, does not scale to our capacity to innovate, nor embodies the free-market principles that lie at the foundation of our economy.
Now, more than ever, the spotlight is on innovation – front and center, loud and clear. This is an unprecedented time for the VC community. Together as a whole, the industry must address venture investments and methods to ensure a continued growth trajectory for promising young companies.
The spotlight has always been on innovation, and now that the numbers are out, the undeniable failure of Venture Capital to tap into that innovation has surfaced. Venture Capitalists need to look inwards at their self-induced dysfunction instead of looking up and hope for “the weather” to get better.
I have asked to present on stage at IBF last year, and so far, they declined. So much for injecting some polarity in the old-boys network. So much for really wanting to improve our capacity to innovate.