Comments on: A new $825M Fund for Venture Capital to be put in place by Quebec Government http://www.vcrants.com/2009/03/a-new-825m-fund-for-venture-capital-to-be-put-in-place-by-quebec-government/ Share the good, the bad and the ugly on the world of Venture Capital and Private Equity in Canada! Tue, 15 Nov 2011 12:52:48 +0000 hourly 1 http://wordpress.org/?v=3.0.5 By: Chris Arsenault http://www.vcrants.com/2009/03/a-new-825m-fund-for-venture-capital-to-be-put-in-place-by-quebec-government/comment-page-1/#comment-1639 Chris Arsenault Wed, 25 Mar 2009 22:52:13 +0000 http://www.vcrants.com/?p=59#comment-1639 Interesting. I do feel this is being answered by different events, coaching and other means but not necessarily as you outline. Here is something somewhat in the same vein: Real-World Examples of Crowd-Sourced Businesses http://adjix.com/jpr3 Interesting. I do feel this is being answered by different events, coaching and other means but not necessarily as you outline.

Here is something somewhat in the same vein: Real-World Examples of Crowd-Sourced Businesses http://adjix.com/jpr3

]]> By: Marc Dangeard http://www.vcrants.com/2009/03/a-new-825m-fund-for-venture-capital-to-be-put-in-place-by-quebec-government/comment-page-1/#comment-1638 Marc Dangeard Wed, 25 Mar 2009 22:50:13 +0000 http://www.vcrants.com/?p=59#comment-1638 In this case, fund management is limited to making sure the entrepreneurs have places where they can meet, and that they do meet on a regular basis. The experts are the entrepreneurs themselves, so no extra cost here. This can be done with a very small staff, the model can easily scale, which is key if you are going to get into seed financing. Note that microfinance can scale very well that way. The team cost is covered by a management fee - 2% to start with, but it can probably be done for less once things are under way. The difference here is that instead of VCs making a lot of money for themselves we are looking at just financing a basic support infrastructure. Microfinance organizations and mutual guarantee funds (in Europe) are very sustainable, and there is a long track record to prove it. VCs can still play in their own field (later stage, the chosen few), and they would probably not be impacted much at the beginning, while this model resolves the seed financing issue. In this case, fund management is limited to making sure the entrepreneurs have places where they can meet, and that they do meet on a regular basis. The experts are the entrepreneurs themselves, so no extra cost here. This can be done with a very small staff, the model can easily scale, which is key if you are going to get into seed financing. Note that microfinance can scale very well that way.

The team cost is covered by a management fee – 2% to start with, but it can probably be done for less once things are under way. The difference here is that instead of VCs making a lot of money for themselves we are looking at just financing a basic support infrastructure.

Microfinance organizations and mutual guarantee funds (in Europe) are very sustainable, and there is a long track record to prove it. VCs can still play in their own field (later stage, the chosen few), and they would probably not be impacted much at the beginning, while this model resolves the seed financing issue.

]]> By: Chris Arsenault http://www.vcrants.com/2009/03/a-new-825m-fund-for-venture-capital-to-be-put-in-place-by-quebec-government/comment-page-1/#comment-1637 Chris Arsenault Wed, 25 Mar 2009 22:49:27 +0000 http://www.vcrants.com/?p=59#comment-1637 Interesting concept. But is it realistic to believe that this model would work? I understand what you want to achieve and what you want to avoid, but I wonder if your proposed model is feasible. Fund management is a business in its self and the partners only make money once they returned the capital plus a minimum threshold and then then share in the profits where a large majority goes to the investors and a minority stake is shared between the partners of the fund. So if we take your model and extended it to how a business operates. Would it be reasonable for a business to give its customers their product, and let the customer decide of the pricing, specifications and value of the product? That would be awesome because companies would then be delivering products that fit the needs and answers to the pains of th market. But is it realistic to believe that the level of collaboration and resources required to get to such point is possible? Second, no two entrepreneurs are alike. Entrepreneurs are unique by default, that’s what makes them entrepreneurs. The succesful ones are those capable of clearly understanding an opportuity in the market and are able to apply as well as fine tune their vision into an unfair advantage compared to other similar offering and therefore, allows them to succeed by transitioning from a start up mode into a growth company making profits. Food for thought! Interesting concept. But is it realistic to believe that this model would work? I understand what you want to achieve and what you want to avoid, but I wonder if your proposed model is feasible. Fund management is a business in its self and the partners only make money once they returned the capital plus a minimum threshold and then then share in the profits where a large majority goes to the investors and a minority stake is shared between the partners of the fund.

So if we take your model and extended it to how a business operates. Would it be reasonable for a business to give its customers their product, and let the customer decide of the pricing, specifications and value of the product? That would be awesome because companies would then be delivering products that fit the needs and answers to the pains of th market. But is it realistic to believe that the level of collaboration and resources required to get to such point is possible?

Second, no two entrepreneurs are alike. Entrepreneurs are unique by default, that’s what makes them entrepreneurs. The succesful ones are those capable of clearly understanding an opportuity in the market and are able to apply as well as fine tune their vision into an unfair advantage compared to other similar offering and therefore, allows them to succeed by transitioning from a start up mode into a growth company making profits.

Food for thought!

]]> By: Marc Dangeard http://www.vcrants.com/2009/03/a-new-825m-fund-for-venture-capital-to-be-put-in-place-by-quebec-government/comment-page-1/#comment-1632 Marc Dangeard Wed, 25 Mar 2009 13:35:24 +0000 http://www.vcrants.com/?p=59#comment-1632 Let’s hope whoever manages these funds are not government employees, as it would be a disaster. And let’s hope it will not be VCs either, because their process is not working for entrepreneurs as it is today. While throwing money at the problem is a good thing, it should come with a real plan to change the way things are done today, because it is all based on a competitive model, with a winner-take-all process that leaves a lot of entrepreneurs out with no help. Not to mentioned all the wasted time to try to get funding and being rejected. A good model for what should be done is what I described on the Entrepreneur Commons website (http://www.entreco.org), and what Mark Reid also suggested, which is to apply the microfinance model to seed investment: Take entrepreneurs, provide them with a mentorship program that includes self-help teams where entrepreneurs can review each others plan and invited guests who can bring their own experience into the mix. Once you have such a program going, and very soon after it is started, you will be able to identify who is good and who needs to do their homework on the business. And entrepreneurs among themselves will also have a very clear idea of who deserves money and who should wait. So after the initial 8 to 12 weeks program, you can just ask entrepreneurs to rank each others, and then you can give investments to the top 30% to 50% depending on how much risk you want to take. With this model, you are talking cooptation rather than competition, everybody learns while going through the process, and there is no rejection, just awards to the best ones, based on the entrepreneurs decision rather than on the judgment of some expert. Let’s hope whoever manages these funds are not government employees, as it would be a disaster. And let’s hope it will not be VCs either, because their process is not working for entrepreneurs as it is today.

While throwing money at the problem is a good thing, it should come with a real plan to change the way things are done today, because it is all based on a competitive model, with a winner-take-all process that leaves a lot of entrepreneurs out with no help. Not to mentioned all the wasted time to try to get funding and being rejected.

A good model for what should be done is what I described on the Entrepreneur Commons website (http://www.entreco.org), and what Mark Reid also suggested, which is to apply the microfinance model to seed investment:

Take entrepreneurs, provide them with a mentorship program that includes self-help teams where entrepreneurs can review each others plan and invited guests who can bring their own experience into the mix.
Once you have such a program going, and very soon after it is started, you will be able to identify who is good and who needs to do their homework on the business. And entrepreneurs among themselves will also have a very clear idea of who deserves money and who should wait. So after the initial 8 to 12 weeks program, you can just ask entrepreneurs to rank each others, and then you can give investments to the top 30% to 50% depending on how much risk you want to take.

With this model, you are talking cooptation rather than competition, everybody learns while going through the process, and there is no rejection, just awards to the best ones, based on the entrepreneurs decision rather than on the judgment of some expert.

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