Jason Freedman has written an excellent commentary, Did everyone see what just happened. The pendulum has swung., on recent investment fever around Y-Combinator out West.
“No business plans, not even pitch decks this time. One 2-1/2 minute pitch and a quick follow up meeting. Seven figure seed rounds that can be closed within days and oversubscribed 2x to 3x. Founders with no experience fundraising and no pre-existing networks, making connections with top tier guys. It was really a sight to see.”
Sight to see, no doubt! And Jason’s own words about the pending “trough of sorrow” are well placed. But what caught my eye was the close.
“And finally, a word to all the investors out there who are crazy-rushed right now with all of us. Thank you for your support. Thank you for putting your money into startups and not some other asset class. Thank you for spending your time on helping this new generation change the world. Thank you for your mentorship, both when we’re looking for it and when we have forgotten that we need it. Thank you for being there for us now when things are good, and thank you for being there for us later when things might not be.”
Let’s be clear. I have not witnessed the same excited investment marketplace here in the good old conservative mid-Atlantic but I certainly connect with the final paragraph. For us to collectively move the ball forward in innovation then we must invest in the entrepreneur-class. We are talking about rapid scale, big dreams and a desire to “change the world.” That comes with a swagger and unfortunately cost. And while we observe the fever in certain areas of the world and potentially shake our heads at how could they do that? That does not seem like a wise play? (And in some cases that is exactly right) We cannot overlook the long term impact of systems that capture belief and passion and attempt to nurture it forward.
A belief that I find well supported in concepts like Y-Combinator, TechStars, 500 Startups, and the Global Accelerator Network. So, while I may write from time to time with my own healthy skepticism of deals like the billion dollar Instagram purchase by FaceBook, I never want that to dampen the spirit the lies behind the rush to fund mentioned by Jason. Sure, it is a rush to maybe get even richer for many but I am choosing to believe it is a rush to believe that we can change the world. In short, I will grab and alter a line from Rumpelstiltskin on ABC’s “Once Upon a Time”: ”All innovation comes at a price, deary“