A VC’s Deepest Darkest Fears…

I was asked by a reporter yesterday what are some of the things I most fear. When I was a child, my nightmares were that I would show up at school naked; thankfully now I usually remember to get dressed before leaving the house. But the discussion yesterday started me thinking about what are some of the things I most worry about now. A partial list is below…

• I dread the late Friday afternoon call from one my CEO’s…”Something has come up – do you have a few minutes?”

• I worry about all of the things out of my control with any of our portfolio companies. For instance, after I fund a hot new start-up, will a dozen “look alike” companies get funded within days after the first board meeting?

• I fear that some awkward revelation comes to light regarding someone we backed – and that we did not uncover it in diligence. I backed a spectacular executive in the mid-1990’s who was never able to discuss what he did in the ‘70’s – my suspicion is that he worked in some sort of covert operations in a tough part of the world.

• I am scared that LP’s (investors in venture funds) tell the venture industry that from this day forward we have to be “self-funding,” that is, VC funds can only raise as much money as they distribute. Through much of the 2000’s the VC industry raised around $30 billion per year; last year it raised less than half of that amount but undoubtedly still more than VC’s distributed in aggregate.

• I fear that somehow this stops becoming one of the best jobs in Boston – but I am not really sure how that could happen.

• Oh, and I am still afraid of heights. Really afraid.

What are your deepest darkest fears? And please try to keep it PG-rated!

5 Comments

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5 responses to “A VC’s Deepest Darkest Fears…

  1. I doubt LPs will mandate “self funding”
    But I wouldn’t be surprised if management fees becoming operating budgets and carry gets pushed behind a more solid preferred return

    The VC asset class needs to return to the days when the premium paid in return justified the high risk, volatility and illiquidity

    Its happening already, and IMHO, its an overdue, healthy thing

    http://j.mp/bnGxMW

    also, my big fear is people will find out what *I* did in the 1970s and 1980s – and while often covert, such had nothing to do with national security.😉

  2. Michael,

    All good things to fear but I have always heard conflicting points of view on your bullet number 2, that suddenly there were a bunch of companies funded doing something similar. On the one hand it is market validation. On the other it is potential competition.

    I suspect you fear the second. If you have made a great choice by investing in a business concept and team you should be able to compete effectively. Further, the other companies may be trying out a business model the new team already found to not work. If not, and the concept is good, perhaps something they can switch to quickly.

    Anyway, hope you get to keep one of the best jobs in Boston.

    PS I am very afraid of heights too. To this day I wonder why I have no problem flying.

    • Great comments Paul and thank you.

      Agree that it is wonderful market validation but it is really tricky to split a $0 billion market with a dozen scrappy companies! I worry that end of sharing small slices of a small emerging market, requiring each one to raise more capital than was initially contemplated at unattractive prices – because the market is deemed too competitive.

  3. Business-wise: I am terrified that even our innovators will become shufflers of paper, fake money, lawsuits and other not-so-innovative endeavors.

    In real life: I am afraid that I will lose my superpowers and be unable to fight crime at night as my alter ego.

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