A week from now I’ll announce in this space an important project involving technology startup companies, which I feel are key to continued economic prosperity for the United States. This will be my major project for 2010 with the Moon shot following in 2011. But first I want to conduct a little experiment involving venture capitalists. How interested are they, really, in your ideas or mine? We’ll see.
This is a tough time to be a VC. Investment returns have been poor for several years. Some of this can be blamed on bad investment decisions, some on a horrific economy, and some of it comes down to what are essentially deferred returns because of the drought of Initial Public Offerings. With not many tech companies going public there are fewer VCs buying private jets.
So the VC community is chastened though not poor and this leads to a trend I’ve noticed of venture firms and their web sites suddenly seeming a lot nicer than they used to be. Nearly every firm on Sand Hill Road says it fosters entrepreneurism, says it gives more than just money (sage counsel, help in hiring, really good coffee, etc.), and offers a channel for you and me to submit our business plans right into the belly of their beast, though with nothing held confidential, of course.
I find this idea fascinating, that anyone (heck, everyone) could submit a business plan for review by some of the smartest (and not so smart) VC’s in the world. Can it really be that easy? If my idea, my technology, my business model, and my target market are all good, can I really get funded through a VC web site alone? History and conventional wisdom suggest not, but those web sites are just so darned cheery that I decided to give it a try anyway.
So last week I wrote a business plan for a real startup. People with good ideas and nowhere better to take them come through my door all the time, so I grabbed one of the better ideas and just wrote it up. The geek in my kitchen this time was supremely experienced and grounded in the real world, his idea was novel and addressed a $7 billion market growing at 30 percent per year. There were, as far as I could tell, only seven competitors, the technology seems protectable, and if any of them rip it off it should be easy to tell. Best of all there wasn’t much money required by VC standards, the development and sales cycles run in parallel, and could be measured in months, not years.
Heck of a deal: one funding stage and profitable in less than a year. This would be many a VC’s dream investment. But only if they know it exists.
I submitted the business plan last week through the very friendly web sites of two Sand Hill Road venture capital firms. One firm is venerable the other fairly new but both are among the best. If they actually read the plan I’m sure they’ll be interested, not just because it is good but because it came from me and these firms both know me. I’m not an idiot — I only play one on TV — and they know that. So the real question is whether the plan will be read at all.
I don’t really know how this vetting process works, but I imagine it must be like the stories I’ve heard about how book publishers handle unsolicited manuscripts, which pile up in corners, are occasionally thumbed through by junior editors, and periodically shoveled in a dumpster, many unread, even unopened.
That’s no way to find the next Moby Dick.
Yet good books are still published because literary agents get their stuff past that pile-from-Hell and into the hands of senior editors who actually buy books. Same with venture capital, where it usually comes down to who you know.
This should be interesting. Will the VC’s read my plan at all? Will they read and reject it? Good plans are rejected all the time. If they reject it will they bother to tell me? If they like it will they bother to tell me? And how long will all this reading and telling actually take? Days? Weeks? Months?
Of course by writing this column I’m unleveling the field a bit. Most firms will do nothing special as a result but a few may actually send someone to paw through that electronic pile of business plans looking for something from me.
I’ll keep you posted.
I’m no genius.. that is all 🙂
I’m second! (As they say on YouTube.)
Hey Bob: instead of doing podcasts for the visually impaired, why don’t you do YouTube videos and expose the whole world to you?
I’ll bet you could put it across in an engaging eye-to-eye manner. But not in the manner of sxephil. Your attractive wife could be in a supporting and speaking role sort of like in the CTFxC channel.
Maybe that’s MY VC business-plan to exploit you as intellectual property in a novel way.
Ugh. Just what the world does NOT need; more video. Although if it doesn’t take the place of the written word, I supposed that is ok. The vast majority of video is a waste of time. I don’t even listen to audio on the internet, unless it’s something I might find entertaining while driving. I can read nearly two orders of magnitude faster than anybody can speak (intelligibly, anyway).
Unlike the written word on the internet, which is only 90% junk, video is 99% junk. It’s the new internet cancer.
Hey TXCHLInstructor:
I did a quick scan of your blog site. Two thoughts came to mind that fit in exactly with you posting here and your blog pages there…
* You write illegibly even in a browser page.
* If you put aluminum foil over the windows of your apartment and paint the side windows of you car black, you will be happier.
I don’t have a problem with video from our host. Although I’ll draw the line at a “Making of the Cringely Family nude Christmas Card” video.
Now watch Bob Cringely get submerged beneath mountains of business plans…
…then Mark can be a VCV (Venture Capitalist Vetter).
It’ll be interesting to hear what happens (or doesn’t happen) in your experiment with Sand Hill Road. For all the folks on the east coast though that have great ideas but not a desire to “go West young man” the situation has traditionally been worse. I assisted a few startups in the past and the VCs here were reluctant to play in the tech space. I’ll be seeing if that’s still the case in a few weeks… what have other folks in the NY/Philly/DC area experienced?
Submitting it during a holiday week was an interesting strategy.
So your new business involves ‘smoothing the way’ between entrepreneurs and VCs, eh? I look forward to reading about the details.
I checked and found that “white whale” means Beluga.
?
I’m still not certain this isn’t a play on words against “white elephant”.
One thing I didn’t appreciate was the leading statement “next week I’ll present an important project”. But I was reading right now! What’s wrong with this week?
Final comment: technology startups have always been important for the economic prosperity of the United States, that they should continue to be so seems fairly self-evident. So as Clara Peller would have said… Where’s the beef??!
The “next white whale” in the title is, I believe, merely a reference to his later ‘Moby Dick’ analogy.
It embodies the next great novel/business plan that is somewhere languishing in an overfilled inbox, unrecognized.
And also implies mania, obsession and death resulting from the pursuit. And death for (almost) all who elected to accompany Capt. Ahab on the enterprise.
Not how I would refer to a startup. ;^)
Is this similar to what you are planning?
http://startuptodo.com/session/new
or this?
https://www.softwarebyrob.com/2009/03/10/what-is-the-micropreneur-academy/
I hope you have a new twist.
Doug
Approaching a VC without a referral? Why would you submit your plan like every other Joe via the VC web site? You, with all your contacts? Why not get a referral and submit your plan that way? You want to succeed or fail from the start?
Doesn’t seem to be an e-mail address or other means of contact, so I’ll post this here: the RSS feeds for the site appear to have been broken with a posting earlier this month. Here’s the error text:
Required white space was missing.
Line: 70 Character: 81
Missing my podcasts…please fix! Thanks. : )
Hmm…posting seems to have stripped out part of the error. Let’s try this:
Required white space was missing.
Line: 70 Character: 81
(carrot went here) enclosure url=”https://www.cringely.com/podcast/20091230.mp3″ length=”a:5:{s:6:”format”;s:14:”default-format”;s:8:”keywords”;s:0:””;s:6:”author”;s:0:””;s:6:”length”;s:0:””;s:8:”explicit”;s:0:””;}” type=”a:5:{s:6:”format”;s:14:”default-format”;s:8:”keywords”;s:0:””;s:6:”author”;s:0:””;s:6:”length”;s:0:””;s:8:”explicit”;s:0:””;}” />
This month I’ve downloaded 6 podcasts although there were more articles than that. The shorter articles are w/o audio. You can download them from the columns. But you are right about the broken rss feeds.
Can you give us a hint what it is? I Googled and found a few “possible ones:”
College IT: “colleges will spend $6.94-billion on information technology this year, which is 35 percent more than last year”
VOIP: “According to the company’s new report, “Streaming Media, IP TV, and Broadband Transport: Telecommunications Carriers and Entertainment Services 2006-2011″, the market for streaming media content will grow at a compounded rate of 33 percent from about $1.3 billion in 2005 to more than $7 billion in 2011.”
Wireless Sensor Networking: “More than half a billion nodes will ship for wireless sensor applications in 2010 for an end user market worth at least $7 billion, according to a recently released report by emerging wireless research firm, ON World.”
Printable Electronics: “According to a new report from NanoMarkets, an industry analyst firm, the market for printable electronics will generate estimated revenues of over $7 billion ($ US) in 2010 driven by demand for printable displays, RFID, photovoltaics, computer memory and other printable products. ”
Molecular Diagnostics: “Growing with a Compound Annual Growth Rate (CAGR) of 19 per cent, global molecular diagnostics market is expected to reach $7 billion by 2011.”
Virtual Goods: “Joffe notably calculates that the virtual goods market in Asia is worth $7 billion this year, versus our calculation that the US virtual goods market is worth $1 billion.”
Is it one of those? 🙂
My first thought when I read this was, “People are actually submitting substantial business ideas anonymously over the internet without anyone signing anything indicating that it happened?” Seems kinda chancy unless your business plan has no particularly innovative angle. Browsing around the Sand Hill Road gang’s sites, I found this example of what it sounds like you’re talking about:
https://www.kpcb.com/initiatives/ifund/index.html
Send us your great idea, we’ll get back to you! We promise! While I’m sure most of what gets submitted is just tossed or ignored, the off chance that Intern Riley decides your iPhone app sounds just good enough for him to outsource it to India under his banner is a little more risk than I’d put up with if I had a good idea in search of funding. Obviously if the concept requires large capital expenditures that’s a somewhat different matter, though the key innovation can still be stolen as an idea pretty easily.
Anyhow, best of luck with the idea! I imagine like most things that increasing ease of access and streamlining the flow of data will increase the amount of content, but it won’t increase the amount of discerning eyeballs required to read the content, so the end result will be the same number of people (or fewer) paying even less attention to even more ideas, heh.
Bob,
Sounds like you might be up to several different things… If it involves helping out a bunch of startup tech entrepreneurs, I’d love to talk with you as well. At the Tech Ranch Austin we’re developing a new model of how to work with tech entrepreneurs- we call ourselves a “community center for entrepreneurs”. Although at some point we’ll accept bplans on our website, our model up to this date has been to create community events that bring tech entrepreneurs “onto the Ranch” where we leverage an almost “opensource” environment for accelerating their progress.
I look forward to what you announce this next week. If there’s a possibility of cross fertilization / partnership / other general interest, let me know. I’ve been a fan of your work for years, and given what you’re hinting about here- there just might be some possibilities of working together at some level.
Best of luck in all you do, and happy new year.
Only a complete idiot would discuss a real idea with someone who hasn’t signed a non-disclosure/compete. That includes posting something on the internet — it is a complete give away. Duh, Cringely.
Mkkby, good VCs do not sign NDAs. That’s just how business is done.
These days you don’t need VCs to start a tech business. Costs are extremely low for everything aside from engineers. If you’re already an engineer, you’ve got that part handled!
It’s not what you know, or who you know, its who knows you.
Somebody went to the trouble to set up these cheery web sites, complete with their file submission mechanisms, which would be completely pointless to have done if these files are never seen by a human. So unless your submission doesn’t make it past the spam filter, and unless the first-line reviewer thinks some random nut-job cribbed your name to get attention, the submission ought to get a serious review.
kz
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Now watch Bob Cringely get submerged beneath mountains of business plans…
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