Lastly, you gotta be kidding if you think the Midas list has any credibility beyond its #1 and #2 VCs. There is less intelligence in the ranking than Bush’s pre-war Iraq briefing. Dont forget, this is the ranking that actually gave David Spreng the #8 spot in 2005: http://www.crescendoventures.com/david_spreng.html
The same guy who has had zero positive exits in his current fund that was raised in 2000.

Sramana

Last fall I started a new web 2.0 company in the team collaboration space. And for this new company I have chosen not to go the VC route. Why? They are asking for way too much (50% off the top) and frankly I can get it going without them (i.e. I don’t need to kiss up to them). The VC model was created from the era of the semiconductor days where an entrepreneur needs millions of dollars of startup capital before they can make a run at it. That is no longer the case. It is now possible to start a play, tighten the belts a little, and reach revenue. The capital equation of the new startup world has changed.

So what is my current view on VC’s? I think they are a dying breed. It is now easier than ever to start companies in the web space. Open source tools and nearly free online services means you can become very productive quickly without needing lots of money to spend on development tools or infrastructre. Hosting services are also next to free, and it will only get more reliable, faster and with more storage. For those venture funds that can not adapt quickly and add more value to entrepreneurs, they will find themselves with lots of money but not able to participate in this new round of web innovation (sure, the semiconductors and the networking plays will still need startup capital). VC served a useful function back-in-the-day, but the clock is ticking for them.

Finally, how I feel about the VC community does not necessarily translate to I how feel about the people in it. There are some rotten apples out there for sure, who are opportunistic and would try to steal your underwear if they catch you in the shower. But based on my past interactions a few years ago, I don’t think Roland Van Der Meer is one of them.

There are also plenty of venture firms and partners that simply don’t behave that way. There is the Valley equivalent of the “Stockholm syndrome” where the entrepreneurs and executives don’t want to speak candidly, honestly about their venture investors actions and decisions for fear it’d ripple out and affect their future. And it isn’t uncommon for VCs to threaten those executives and entrepreneurs, directly or indirectly, subtly or with force, to affect their future unless they comply. And if they don’t comply, they can always make the next round of financing difficult. And so on.

In that light, Clark’s puff story about Van der Meer is all to understandable and predictable. Expect to see a few like that every time a VC’s track record is laid out for closer inspection. Expect portfolio company executives, esp current portfolio and those seeking funding or about to, to chime up and cast their investors in glowing, sun-drenched light.

Those with burnt fingers have a more credible story to share that we can all learn from. And ComVentures/Van der Meer, Worldview/Orsak, Crescendo/Spreng and their cohorts-in-crime have created enough smoke and train wrecks that entrepreneurs, executives, and importantly their LPs are already taking notice.

Then again I do look forward to VentureBeat.com update on this story.

In the 3+ years that I worked with Roland, he remained a nurturing and honest board member. Don’t get me wrong, I didn’t see eye-to-eye with him on many issues and he was every last bit a capitalist who had his fund’s interest at heart. But I felt he did so with lots of integrity and class. As an entrepreneur and CEO, I did not feel that I had to constantly watch my back to keep from being screwed…Starting from term sheet negotiation (we were offered reasonable middle-of-the-road terms) all the way to the decision to ramp down the company (we considered and exhausted all viable options for the time). I still remember after one particularly contentious session during the initial funding term negotiation, Roland told me that “Don’t worry, for the rest we will just treat each other like human being”. He remained true to his words throughout our working relationship.

I don’t know the details at FilmLoop or Firefly. But I do know that it’s much easier to cast judgment from the sideline when we do not have to deal with all the constraints of the situation. Often after we know all the facts, the “right” decision becomes much less clear. When a play goes south it’s tempting to point fingers and grind axes, but speaking from my personal experience, I’m glad I had taken investment from ComVen, and of the many VC’s I know, Roland in particular is a someone I would not hesitate to have in my corner. Contact me (via LinkedIn) if you like to speak with me about this topic.

Matt, fairness demands Nishan’s founder and executives be provided an opportunity to respond to Van der Meer’s characterization of what ensued at Nishan. In their absence lies and fallacies polished many times by the likes of Van der Meer will be passed on as truth. And that’d be a disservice to entrepreneurs and employees and, indirectly, to the limited partners as well. Their response to Van der Meer will reveal how much ComVentures and Van der Meer pocketed out of Nishan, how much they would have made if they didn’t wash out the common (and some preferred) shareholders, how much their crony CEO made for playing the investors tune and how long he stayed at the company to reap that reward in contrast to what the founder and executives, etc. This story needs air time and that will reveal ComVentures/Van der Meer for what they are.

The pain of this process, in my view, comes from the asymetry between VC employees(partners) and Company(employees). If the company does well, the VC personally makes as much as a senior exec. If the company folds (as a result of a foul $12M investment), the employees loose their job, struggle to make mortgage payments and daycare payments, while the VC continues to cash his $500K+++ salary. For those slow at math, that’s $20K every 2week, despite having made a stupid $12M investment. So for investors, or “financial intermediaries”, it’s a game of: face we win, tail you loose!

People see and feel this asymetry (or injustice) and feel it’s not fair. Entrepreneurs and VCs aren’t in this game together…unfortunately.

If LPs aligned the interests of intermediaries more appropriately, investment decisions would be more rational, and people (the fodder) would have more stable jobs.