Looking to fund a new venture today offers extreme conditions of uncertainty, but a wide variety of possible options.
Last week I attended a Silicon Flatirons conference on “The Future of Entrepreneurial Finance”. This was a really intriguing event, with super relevant panelists and a great turnout of attendees. A few standout panelists were Jason Mendelson of The Foundry Group, Nicole Glaros of TechStars, and Jon Nordmark, CEO of Using Miles (prior CEO of eBags).
One of the topics sparked a lot of discussion, and attracted my interest in particular. That is, the changing dynamic between capital and “control” in today’s start-up and Venture Capital environment. This is in essence an extension of the age-old Berle-Means thesis, brought to life again. It was said that the landscape of early-stage capital is becoming more and more fragmented. With the emergence of crowd source funding portals, the rise of Super Angels, Micro-VC’s, Accelerators, and other new avenues of raising money, there are more than a few options out there for entrepreneurs on the prowl. While at first this might look like a great thing for start-ups and innovators, the question arises about the potential consequence in the lack of mentorship, oversight, or expertise in these new models that can typically be expected in a traditional start-up/VC relationship.
On the flip side, new capital avenues like crowdfunding let the entrepreneur have all the power to call the shots - without worrying about an investor looking over their shoulder, or a Board Member telling them how to run their business.
So is this a good or a bad thing? Can the de-coupling of capital investment and outside management and oversight be successful? Is an unbundled capital investment more or less valuable than a bundled one?
The answer that grew out of the discussions at last week’s conference is: it depends. It depends largely upon who the Entrepreneur is and what level of experience he/she has. It depends on the unique needs of the startup company and what stage of growth it is in. It depends on the personal relationship between an investor and the entrepreneur(s). There are countless other factors that play into this scenario.
My personal opinion is that in most circumstances a bundled approach to capital + expert management is better, so long as there is a mutual feeling of respect in the relationship between investor + entrepreneur.
I’m curious to know what you all think. Is the capital system too fragmented? What do you think the wave of the future is in entrepreneurial finance? How does this relate to the Denver startup community? Leave a comment here, or hit me up on twitter @danielscarter.
- Daniel Carter
www.danielcarter.co