"“Don’t
equate raising money to success. I’d rather see
start-ups be scrappy, frugal, and … on a lean diet of ramen noodles.”
-- Ram Shriram
Roger NcNamee is one of my favorite writers and VC's. I am always interested in hearing what he has to say. Recently, he and Ram Shriram, the reknowned angel investor in Google and Plaxo, spoke at the Web 2.0 Summit. One of the key themes they hit was on the change in the exit environment and how much to raise. Here is a Red Herring Article on the panel (VC's Giving Away Secrets). Also, below is the VentureWire exerpt on it.
The themes may sound a bit repetitive from the ramblings on this blog...
"Ram Shriram and Roger McNamee sit at opposite ends of the investing continuum.
Shriram, an angel investor, typically commits $100,000 to $1 million to young start-ups, while McNamee's private equity firm, Elevation Partners LP, recently paid about $250 million for a minority stake in Forbes Media Inc.
But sitting down onstage at Thursday's Web 2.0 Summit in San Francisco, both agreed that venture firms are pouring perhaps too much money into Internet start-ups that are unlikely to grab YouTube-size returns.
"If you have a really good idea and a great team you can probably...raise a lot of money," said McNamee. "But don't equate raising money with success."
Shriram warned against large funding rounds that increase the pressure for large exits. "The challenge ends up being how do you [recreate] YouTube's success...and my view is there are going to be very few and far between exits over $1 billion," Shriram said. "I'd rather see start-ups scrappy and frugal and on a diet of Ramen noodles."
For investment opportunities, McNamee pointed to technology and services that provide a way for consumers to express themselves online. He also pointed to Elevation's investment in Forbes Media, and said one goal of the company will be to personalize media content for individual users."
Does Ram still have credibility on this while sitting on the Board of Google years after an IPO? If his true passion is startups, why divert your attention?
Posted by: David Dalka | November 10, 2006 at 06:03 PM
A lot of VC's drop off company boards when they go public due to issues around SOX and securities litigation. When these firms are central to their tech ecosystems, it is a great window into new trends and firms and for intros to promising firms. As you point out, it helps to stay active with start-ups to not lose touch with that world...
Posted by: mbmccall | November 16, 2006 at 01:24 AM