Venture Capitalists Need to Adapt to Web 2.0

If a college sophomore like Mark Zuckerberg decides to start a billion dollar company like Facebook in his dorm room, he will never get seed funding from Draper Fisher Jervetson or Bessemer Venture Partners.

Why?

DFJ and BVP are examples of Venture Capitalists that consider themselves open to Web 2.0 seed round VC, but require full resumes and completed business plans prior to consideration. By this measure, they are insuring they will never fund a Kevin Rose of Digg, or a Steve Huffman of Reddit.

VC’s Should Adapt

I’ve written and read hundreds of business plans from my time working in Venture Capital, and I fully concede that a well written BP is eventually crucial for any business. After all, what is a 10Q or annual report if not a matured business plan?

But for Web 2.0, this standard cannot apply. The Web 2.0 world moves at the speed of light. A well written business plan is at least 70 pages of detailed charts and analysis requiring over 100 hours of labor.

Try to picture Mark Zuckerberg halting operations on Facebook for 120 hours so he can spend a month writing a business plan that Bessemer will consider. Then imagine Draper Fisher passing on Zuckerberg because of his resume. A college sophomore with no work experience? How about Kevin Rose of Digg…a 20-something college dropout?

Some Venture Capitalists Get it Absolutely Right

I admire the entrepreneur-friendly practices of seed VC’s like Union Square Ventures and Shasta Ventures that don’t require a business plan for submission – only a great site. Other VC’s can take a cue here. Running a great website should be the only metric for investment.

My Brilliant and Unsolicited Advice for Draper, Bessemer, et al

I’m only picking on Draper and Bessemer because they are fresh in my mind from my last post, TheFunded.com Lets You Research Venture Capital. But I do believe all seed round Web 2.0 VC’s should reword their online submission policies, or risk closing themselves off from the most exciting Web 2.0 opportunities. VC’s, if you feel I am wrong here, I invite you to leave a comment setting me straight. Otherwise, change the wording on your websites!

Why not experiment? Try setting your policy at “brief executive summary and weblink,” and I believe your online submissions will become much more exciting in the months to come.

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2 Responses to Venture Capitalists Need to Adapt to Web 2.0

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