36 ms·

A Rant on VC in the Flyover States from an Arkansan that Raised $100 million

9 points by quizprep 12y ago

Flux159 12y ago
Reading the article, I was reminded of pg's essay on trying to create another Silicon Valley: http://www.paulgraham.com/siliconvalley.html http://www.paulgraham.com/siliconvalley.html I think its great that the author is putting his own money and efforts into making northwest Arkansas a better hub for entrepreneurs. However, I think that one of the reasons that it was/is difficult to get money from investors in the area is due to the fact that many of the current investors may not have earned the money through recent startups, which seems to be a key factor in whether they would want to invest in other startups in the area.
- quizprep 12y ago
  Bingo, Flux159! That is the difficulty: there is no flywheel effect of compounding investments in our region. My company was the only startup liquidity event in recent years in NW Arkansas. Not surprisingly, the two or three angels that participated in that lucrative deal are VERY motivated to continue investing. But it takes a village, and a couple people don't constitute a village. Interestingly, I have no shortage of new investors eager to invest in my next deal. I've chosen to leverage that goodwill in a grand experiment... My theory is that by personally helping the best-of-the-best entrepreneurs raise seed capital (leveraging my goodwill as needed) that I can artificially create the needed flywheel effect. I'll either succeed, or turn my goodwill into BADwill :)
  - jordantcarlisle 12y ago
    quizprep you know better than most in AR. There's a bit of chicken and egg to entrepreneur and vc happening. Do you think increasing startup density will help? Should this be program driven or entrepreneur/mentor driven? Will your "venture production studio" look like TechStars (programmatic), YC (mentor network), or a different variation. I get pissed off at the amount of people who say we need more entrepreneurship compared to people shutting up and building. Do you know folks who have the means to be entrepreneurs in AR, but are sitting on the sidelines?
    - quizprep 12y ago
      I'm going to "shut up and build" right alongside the entrepreneurs. (BTW - Love that phrase... I'm stealing it!) Clearly this approach is not very scalable longterm across dozens of companies if I do it alone. So I'm building a team of full-time, world-class experts (design, dev, growth hackers, entrepreneurs, etc) to also "shut up and build." With the small team I've assembled, we can build half a dozen "obviously fundable" projects over the next 6 months. The deal flow is there - in fact, if additional resources were available, we could launch a dozen. If I can't find a lead investor for the new projects, I'll simply lead the rounds myself and hope others follow... again, not long term sustainable (I'm not a blazillionaire.) But by leading the first dozen ventures myself, I believe the lemming-like investors who follow on behind my lead can begin to get some comfort around building a portfolio. Statistics and history tell us that we need to take at least 50 GOOD swings to build a homerun (Series C) business. As a state, we need to take a minimum of 50 GOOD swings every year. (Note the emphasis on the word "good.") To your second question: I ABSOLUTELY know of entrepreneurs who are sitting on the sidelines due to lack of seed funding. A couple dozen, actually. I'm not talking middling college grads either - I'm talking mid-career 25-35 year old, A+ rockstars who are experts in their field who have a fundable business plan gathering dust. They don't jump because the risk is too great. And I don't fault them for that. Think about it - as a society who wants more entrepreneurs, we're asking potential entrepreneurs to abandon a steady paycheck at a cushy job AND risk their entire life savings to fund their new venture. Entrepreneurs shouldn't have to bear ALL the risk... even with seed funding, entrepreneurs still shoulder the VAST majority of risk. Abandoning a steady paycheck is hard enough... someone willing to that AND risk their life savings is likely clinically insane. As a culture without seed funding readily-available for the best and brightest, I believe we're building a startup system than selects for the clinically insane! The last thing we need is a bunch of mediocre (perhaps insane) entrepreneurs pursuing mediocre ideas receiving seed funding from mediocre sources.

9 points by quizprep 12y ago

Reading the article, I was reminded of pg's essay on trying to create another Silicon Valley: http://www.paulgraham.com/siliconvalley.html http://www.paulgraham.com/siliconvalley.html I think its great that the author is putting his own money and efforts into making northwest Arkansas a better hub for entrepreneurs. However, I think that one of the reasons that it was/is difficult to get money from investors in the area is due to the fact that many of the current investors may not have earned the money through recent startups, which seems to be a key factor in whether they would want to invest in other startups in the area.

quizprep 12y ago
Bingo, Flux159! That is the difficulty: there is no flywheel effect of compounding investments in our region. My company was the only startup liquidity event in recent years in NW Arkansas. Not surprisingly, the two or three angels that participated in that lucrative deal are VERY motivated to continue investing. But it takes a village, and a couple people don't constitute a village. Interestingly, I have no shortage of new investors eager to invest in my next deal. I've chosen to leverage that goodwill in a grand experiment... My theory is that by personally helping the best-of-the-best entrepreneurs raise seed capital (leveraging my goodwill as needed) that I can artificially create the needed flywheel effect. I'll either succeed, or turn my goodwill into BADwill :)
- jordantcarlisle 12y ago
  quizprep you know better than most in AR. There's a bit of chicken and egg to entrepreneur and vc happening. Do you think increasing startup density will help? Should this be program driven or entrepreneur/mentor driven? Will your "venture production studio" look like TechStars (programmatic), YC (mentor network), or a different variation. I get pissed off at the amount of people who say we need more entrepreneurship compared to people shutting up and building. Do you know folks who have the means to be entrepreneurs in AR, but are sitting on the sidelines?
  - quizprep 12y ago
    I'm going to "shut up and build" right alongside the entrepreneurs. (BTW - Love that phrase... I'm stealing it!) Clearly this approach is not very scalable longterm across dozens of companies if I do it alone. So I'm building a team of full-time, world-class experts (design, dev, growth hackers, entrepreneurs, etc) to also "shut up and build." With the small team I've assembled, we can build half a dozen "obviously fundable" projects over the next 6 months. The deal flow is there - in fact, if additional resources were available, we could launch a dozen. If I can't find a lead investor for the new projects, I'll simply lead the rounds myself and hope others follow... again, not long term sustainable (I'm not a blazillionaire.) But by leading the first dozen ventures myself, I believe the lemming-like investors who follow on behind my lead can begin to get some comfort around building a portfolio. Statistics and history tell us that we need to take at least 50 GOOD swings to build a homerun (Series C) business. As a state, we need to take a minimum of 50 GOOD swings every year. (Note the emphasis on the word "good.") To your second question: I ABSOLUTELY know of entrepreneurs who are sitting on the sidelines due to lack of seed funding. A couple dozen, actually. I'm not talking middling college grads either - I'm talking mid-career 25-35 year old, A+ rockstars who are experts in their field who have a fundable business plan gathering dust. They don't jump because the risk is too great. And I don't fault them for that. Think about it - as a society who wants more entrepreneurs, we're asking potential entrepreneurs to abandon a steady paycheck at a cushy job AND risk their entire life savings to fund their new venture. Entrepreneurs shouldn't have to bear ALL the risk... even with seed funding, entrepreneurs still shoulder the VAST majority of risk. Abandoning a steady paycheck is hard enough... someone willing to that AND risk their life savings is likely clinically insane. As a culture without seed funding readily-available for the best and brightest, I believe we're building a startup system than selects for the clinically insane! The last thing we need is a bunch of mediocre (perhaps insane) entrepreneurs pursuing mediocre ideas receiving seed funding from mediocre sources.