With the announcement by O’Reilly Media of their decision to enter the early-stage venture capital market, I’ve been thinking a lot more about venture capital. Two weeks ago, at the Future of Web Apps conference, I had the pleasure of listening to a speaker from Index Ventures (who has invested in companies including Skype, Last.fm, and MySQL). Following the speaker, I walked outside and spoke with other conference attendees who (myself included) wanted to know how to become a venture capitalist. This was ironic because many of the attendees at the conference were all entrepreneurs.
It is no wonder that we were all clamoring about how to become a venture capitalist considering Index Ventures’ outstanding portfolio performance. The key value that a venture capital fund provides is not only capital but a network of resources that can greatly increase the start-up’s chance of success. From an entrepreneur’s point of view, the life of a venture capitalist is one of luxury. I myself partially agree with this position. A VC has the luxury of picking out new ventures that have the greatest opportunity of success within a market that they know intimately. Rather than performing all the hard work of an entrepreneur, they simply need to do their due diligence, provide capital and contacts and their good to go. Well, not exactly. I am undercutting the amount of work done by the Venture Capitalist but this is the glamorous picture painted by the Index Ventures speaker in his short speech (or at least my take on it). I would be interested to hear a venture capitalist’s take on this. Perhaps Fred Wilson could shed some light on my biased view?