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I like all of the criteria laid out for portfolio investments, save #5: The entire team should be located in the SF Bay Area. I'm seeing this requirement more a

I like all of the criteria laid out for portfolio investments, save #5: The entire team should be located in the SF Bay Area. I'm seeing this requirement more and more often among venture firms. Clearly K9 Ventures has had success with their investments, so they are free to allocate their money as they choose. I have nothing against the Bay Area. I went to school here, live here, and started my company here. However, if I want to start another venture down the road I feel like I'd have no choice but to start it here. And not having choice only hurts the entrepreneur.

diego 14y ago
Those are his criteria, not yours. He lives in the Bay Area and wants to be close to all the companies he invests in. As an entrepreneur, you'd have to start a company here if you'd like Manu to invest in you. If you want to start it someplace else, then he may not be the right investor for you. It's that simple. What I like about Manu's criteria is that they are very clearly laid out. Not all investors make it so easy to know what they expect out of companies, so they end up wasting a founder's time. Disclosure: I've known Manu since the late 90s, and he invested in my company (IndexTank).
- therealarmen 14y ago
  I definitely appreciate how clearly everything is laid out. Some VCs have ridiculously wishy-washy copy on their website. If I had a nickel every time I read about "investing in big ideas" I'd have a $1M seed round in no time.
- sid_viswanathan 14y ago
  Well said Diego. I think it's a testament to Manu's desire to be hands-on and actively involved in every company he backs. He wants to add value to everything he is involved with, and the best way he can do this is by being close to the companies he invests in.
bluestix 14y ago
I wonder when all these Bay Area VC's are going to realize that the smartest people are smart enough to not live on active fault lines in earthquake season.
johnrob 14y ago
Investors are gamblers, and gamblers look for good odds. Until we can prove that the odds of success in the Bay Area are not better than other places, we'll have to often deal with required local operation. Lots of folks who aren't already wealthy would prefer living elsewhere (unless you like places with Manhattan-style prices, but no Manhattan-style amenities).
- sid_viswanathan 14y ago
  Do you really believe that the odds of success outside of the SF Bay area are equal to the odds of success in the Bay area?
  - krschultz 14y ago
    I think there are other places that can be equal. I would think that includes Boston, New York, Boulder, and maybe a few others. They key is a support network of entrepreneurs and potential employees with an interest in/experience in startups. On the other hand, starting your business in a random town probably won't have great odds.
  - qq66 14y ago
    That's not really the right question -- it's more about the investment opportunities inside and outside the Bay Area. In SFBA, there are so many startups that if you're a median investor you are investing in perhaps the 1000th best opportunity in the area. If you are willing to invest in a place with fewer investors, you may be investing in the 1st-5th best opportunities in say, Jacksonville FL. However, that assumes that it's possible to rank order these a priori, and more importantly, that you can serve your portfolio companies as effectively when remote (you can't).
nikcub 14y ago
I think one of the reasons they do this is because a last resort for local startups is to sell out in an acqihire to one of the large tech companies in the area, who are always looking to acquire local developer talent. You don't have that asset to sell if your team are spread out across the world, or are located somewhere else.

diego 14y ago

Those are his criteria, not yours. He lives in the Bay Area and wants to be close to all the companies he invests in. As an entrepreneur, you'd have to start a company here if you'd like Manu to invest in you. If you want to start it someplace else, then he may not be the right investor for you. It's that simple. What I like about Manu's criteria is that they are very clearly laid out. Not all investors make it so easy to know what they expect out of companies, so they end up wasting a founder's time. Disclosure: I've known Manu since the late 90s, and he invested in my company (IndexTank).

therealarmen 14y ago
I definitely appreciate how clearly everything is laid out. Some VCs have ridiculously wishy-washy copy on their website. If I had a nickel every time I read about "investing in big ideas" I'd have a $1M seed round in no time.
sid_viswanathan 14y ago
Well said Diego. I think it's a testament to Manu's desire to be hands-on and actively involved in every company he backs. He wants to add value to everything he is involved with, and the best way he can do this is by being close to the companies he invests in.

bluestix 14y ago

I wonder when all these Bay Area VC's are going to realize that the smartest people are smart enough to not live on active fault lines in earthquake season.

johnrob 14y ago

Investors are gamblers, and gamblers look for good odds. Until we can prove that the odds of success in the Bay Area are not better than other places, we'll have to often deal with required local operation. Lots of folks who aren't already wealthy would prefer living elsewhere (unless you like places with Manhattan-style prices, but no Manhattan-style amenities).

sid_viswanathan 14y ago
Do you really believe that the odds of success outside of the SF Bay area are equal to the odds of success in the Bay area?
- krschultz 14y ago
  I think there are other places that can be equal. I would think that includes Boston, New York, Boulder, and maybe a few others. They key is a support network of entrepreneurs and potential employees with an interest in/experience in startups. On the other hand, starting your business in a random town probably won't have great odds.
- qq66 14y ago
  That's not really the right question -- it's more about the investment opportunities inside and outside the Bay Area. In SFBA, there are so many startups that if you're a median investor you are investing in perhaps the 1000th best opportunity in the area. If you are willing to invest in a place with fewer investors, you may be investing in the 1st-5th best opportunities in say, Jacksonville FL. However, that assumes that it's possible to rank order these a priori, and more importantly, that you can serve your portfolio companies as effectively when remote (you can't).

nikcub 14y ago

I think one of the reasons they do this is because a last resort for local startups is to sell out in an acqihire to one of the large tech companies in the area, who are always looking to acquire local developer talent. You don't have that asset to sell if your team are spread out across the world, or are located somewhere else.