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Thursday
Jun102010

Beware the sharks

By Rowan Gilmore

There are some things in life that would work really well if you could just change one thing, like flying economy class if the seat next to you were always empty, or hospitals that had a break from patients. In commercialisation, it would be if venture capitalists actually had money to invest in really early stage ventures. 

 

Until I knew better, I always thought being a venture capitalist would be fun, because it always seemed to me they were the top of the tree, had no customers, dispensed largesse, and answered to very few people. In other words, money brings power. Perhaps that's why there are so many wannabees around, posers who pretend they have money to invest so everyone else will flock to them (goodness knows, there must be something attractive about them!)

 

Thus begins one of the most classic tricks in the book for new babes in the wood - pretend you have money to invest and people will come running. Better yet, pretend you have access to a huge network of "high net worth individuals (HNWIs)", individuals with enough disposable income to make you think they might invest in start up companies. Throw in a bit of fast-talking sales gloss, and presto - you have the basis of a huge industry of "commercial advisors" and "investment groups" ready to do a deal of a lifetime.

 

Problem is, the sad truth is that there really is very little money sitting around waiting for the next great thing. Institutional "venture capital" money is even scarcer - in Australia there is probably less than $10M invested in pre-seed, pre-revenue ideas each year. Commercialisation Australia might change that a little, but watch this space for their co-investment requirements, and where that will have to come from.

´╗┐

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