Comments on: Is innovation too risky for venture capital? http://ideanomics.com/2008/06/25/is-innovation-too-risky-for-venture-capital/ the value of great ideas Thu, 20 Nov 2008 22:35:28 +0000 http://wordpress.org/?v=2.5.1 By: Nick Pelling http://ideanomics.com/2008/06/25/is-innovation-too-risky-for-venture-capital/#comment-30 Nick Pelling Thu, 17 Jul 2008 17:34:20 +0000 http://ideanomics.com/?p=45#comment-30 Hi Greg, Hmmm: surely "risk-averse VCs" would be like a tomato-averse pizza company? Perhaps the time is right for "ideanomic disruption" in the VC arena? I'm thinking in terms of a mechanism whereby banks can construct more aggressive ways of funding (such as Bowie Bonds, and/or patent-holding SPEs/SPVs, though not Enron-style, of couse). Certainly the investment banks have no difficulty in engineering weird and wonderful financial instruments, so there's no intrinsic problem with the numbers. Yet the legal cost of constructing such a working framework from scratch is currently likely to be prohibitive for all but the largest deals. And so I think that the most disruptive piece of ideanomic research you could do/commission/support/encourage would be this: to produce a basic legal framework for a patent-holding / rights-holding SPE, so that banks can make early-stage investments into companies without invoking excessive legal cost in the process. What do you think? Cheers, .....Nick Pelling..... Hi Greg,

Hmmm: surely “risk-averse VCs” would be like a tomato-averse pizza company?

Perhaps the time is right for “ideanomic disruption” in the VC arena? I’m thinking in terms of a mechanism whereby banks can construct more aggressive ways of funding (such as Bowie Bonds, and/or patent-holding SPEs/SPVs, though not Enron-style, of couse). Certainly the investment banks have no difficulty in engineering weird and wonderful financial instruments, so there’s no intrinsic problem with the numbers. Yet the legal cost of constructing such a working framework from scratch is currently likely to be prohibitive for all but the largest deals.

And so I think that the most disruptive piece of ideanomic research you could do/commission/support/encourage would be this: to produce a basic legal framework for a patent-holding / rights-holding SPE, so that banks can make early-stage investments into companies without invoking excessive legal cost in the process.

What do you think?

Cheers, …..Nick Pelling…..

]]> By: Jackie Hutter, IP Strategist http://ideanomics.com/2008/06/25/is-innovation-too-risky-for-venture-capital/#comment-28 Jackie Hutter, IP Strategist Thu, 03 Jul 2008 18:58:37 +0000 http://ideanomics.com/?p=45#comment-28 Great post. There is no mystery here: most people become more conservative as they gain experience, and they tend to rely on time-tested personal methodologies. Unfortunately, most people don't admit that they have changed but, rather, tend to find (invent) reasons other than conservatism to explain their current state of mind. In the context of this post, they say something odd like "we only invest in companies that have been de-risked." This is non-sensical in the VC context, as you identify. Like you, I agree that when VC's decide that risk aversion is the preferred business model, there are many opportunities for aggressive (and more "traditional") VC types to captitalize on such "risky" opportunities. Hopefully, up and coming VC-types are looking at the risk-taking young version of their senior VC counterparts, not the conservative older version, or else the VC world will be on the decline. Great post. There is no mystery here: most people become more conservative as they gain experience, and they tend to rely on time-tested personal methodologies. Unfortunately, most people don’t admit that they have changed but, rather, tend to find (invent) reasons other than conservatism to explain their current state of mind. In the context of this post, they say something odd like “we only invest in companies that have been de-risked.” This is non-sensical in the VC context, as you identify. Like you, I agree that when VC’s decide that risk aversion is the preferred business model, there are many opportunities for aggressive (and more “traditional”) VC types to captitalize on such “risky” opportunities. Hopefully, up and coming VC-types are looking at the risk-taking young version of their senior VC counterparts, not the conservative older version, or else the VC world will be on the decline.

]]> By: Tim Ramsey http://ideanomics.com/2008/06/25/is-innovation-too-risky-for-venture-capital/#comment-24 Tim Ramsey Wed, 25 Jun 2008 13:45:01 +0000 http://ideanomics.com/?p=45#comment-24 I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog. Tim Ramsey I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog.

Tim Ramsey

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