Risk Capital ~ From Angels, VCs, PE and even to the CIA!
Loading ...Innovation and entrepreneurship are the engines of any society and economy. Why? Because entrepreneurship acts as a tremendous catalyst of ideas, learning, change, wealth creation and distribution and more importantly all round growth. This is why areas like Silicon Valley, Israel, Scandinavia, Bangalore, et al have made an impact not only to the societies around their geographies but also to the world at large.
http://www.siliconvalleyonline.org/profile.html
Ecosystem clusters are critical to innovation and entrepreneurship from academia, government as a sponsor of innovation (the US government is a role model here), risk capital (Angels, VCs &Private Equity), entrepreneurs, customers and financial markets (IPOs) as early adopters of innovation. I am going to focus a little on risk capital. Why?
Because risk capital helps bootstrap and turn critical ideas into businesses that play out the continuous Darwinism. It is this investing ecosystem that enables the vast food chain feed of each other that fuels innovation and entrepreneurship and has added hundreds of billions of dollars in wealth and millions of jobs created over the years. Now that is impacting society positively.
http://www.h-net.org/~business/bhcweb/publications/BEHprint/v020/p0200-p0209.pdf http://en.wikipedia.org/wiki/Angel_investor http://en.wikipedia.org/wiki/Venture_capital http://www.nvca.org/val_guidelines.html http://www.mgimo.ru/fileserver/news/2007-10-30_paulsen.doc http://www.iphandbook.org/handbook/ch13/p03/
So over the last seventeen years of being in the tech industry has taught me the importance of basics of anything that one does and especially when making investments;
a. Invest in people (read ability to execute)
b. Invest in businesses you understand
c. Get a clear Risk vs. Return metrics mapped
And to add when investing in companies through the markets always invest and stay focused as long as there is “fundamental value”. Which is why when markets crash they throw up great opportunities for investing and everyone runs away and it is in these times you see a lot of value getting unlockedbased on fundamentals and when markets are irrational then one treads carefully looking for fundamentally long term growth opportunities. Personally I never focus on the behavior of the markets, but the fundamentals of companies, the people, economies and ROI/ROE.
I leave you with In-Q-Tel (www.inqtel.org ) as a case in point of the innovation and entrepreneurship ecosystem and how even the CIA is a venture capitalist!
“In-Q-Tel identifies and partners with companies developing cutting-edge technologies to help deliver these solutions to the Central Intelligence Agency and the broader U.S. Intelligence Community (IC) to further their missions.
Launched by the CIA in 1999 as a private, independent, not-for-profit organization, IQT was created to bridge the gap between the technology needs of the Intelligence Community and new advances in commercial technology. With limited insight into fast-moving private sector innovation, the IC needed a way to find emerging companies, and, more importantly, to work with them. IQT, as a private company with deep ties to the commercial world, is able to attract and build relationships with technology entrepreneurs outside the reach of the IC. In fact, more than 75 percent of the companies that IQT works with had never done business with the government before partnering with IQT.
Similar to a corporate strategic fund like those found at Intel Corporation, Motorola and Disney, IQT operates for the strategic – rather than financial – benefits to its customers in the IC. IQT targets its technology engagements based on a deep understanding of the challenges of our Intelligence customers to deliver solutions that will provide strategic advantage to the mission of intelligence.
To best serve its customers, In-Q-Tel plays multiple roles:·
- A technology accelerator, fostering development and introduction of technologies needed by the Intelligence Community·
- A capabilities builder, helping nascent commercial technologies mature into commercial-off-the-shelf (COTS) products the government can buy·
- An idea lab and forum for innovation, providing the Intelligence Community with insight and access to both new technologies and leading innovators and thinkers
- A strategic investment firm, investing in companies and helping build businesses into reliable providers for the Intelligence Community
…..To achieve our goal of finding, adapting, and delivering technologies of strategic interest to our customers – the CIA and the broader U.S. Intelligence Community – IQT has:·
- Delivered more than 140 technology solutions·
- Engaged with more than 100 companies, and more than 10 universities and research labs in the U.S. and
Canada· - Cultivated a network of more than 200 venture capital firms, and 100 labs and research organizations
- Reviewed more than 6300 business plans “
Isn’t risk capital critical in the ecosystem cluster of innovation, entrepreneurship, job and wealth creation? Imagine if we all aligned and contributed collectively to this cluster?
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