Monday, July 18, 2005

Mommy, What's a Venture Capitalist?

More and more people are beginning to poke their stick in the venture capitalism antpile.

It is only natural that as Mainstream Media (MSM) begins to blow the cover off the hyper-secretive world of hedge funds, a concurrent expose of VCs will follow.

And we have Spitzer to thank for it.

The increasingly inquisitive or accusatory stance Americans are taking against Wall Street and its various progeny is of course a by-product of the Enron, Tyco, and Adelphia (to name a few) debacles.

In short, as Main Street's infatuation with Wall Street's less visible personae escalates, you'll see a growing interest in Venture Capitalism.

Trust me.

Today, Barron's keeps a close eye on what VCs write in their blogs.

Movies like Startup.com (highly recommended tragedy of govWorks.com) and E-dreams (rise and fall of Kozmo.com) give us -- at best -- a peek into the VC netherworld where lucrative deals are termed and closed by fully Blackberried, middle-aged men in Oxford button downs and Eddie Bauer khakis.

In Startup.com, camera's aren't even allowed inside KPCB's offices.

No, all we see is govWorks.com CEO Kaleil Isaza Tuzman walk out with a grin on his face after a VC shits on his business plan.

Finally, go to Amazon -- you'll be surprised by the scarcity of VC books available.

The bottom line is that VCs inhabit an underworld closed off to the public.

And please, let's call a spade a spade.

Venture capitalism is a netherworld distant from the average American's radar screen.

Ask 10 people in Washington Square Park what a mutual fund is - I presume at least 8 will respond correctly, if not all of them.

Now ask them: "Excuse me, Sir, do you know what venture capitalists do?"

I'd like a tally on that one...

If you mix a few very smart people with some mediocre people and a lot of dumb people, you'll most likely end up with a dumb answer.

In fact, the secrecy is such that this weekend, I read in Barron's that a KPCB partner had told the weekly paper that "there's NO WAY someone not affiliated with KPCB could determine how much partner John Doerr made on the Google investment" (or something to that effect).

You get my point.

If you're not inside the circle, you're outside it.

Oh, and by the way, Doerr made an estimated $530 million off a $12 million dollar investment in Google.

And you wonder why VCs have become Wall Street's rock stars?

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