I have come to realize that the current investment culture in America sees business equity investment in the same way. If there is no exit, you are stuck in hell.
There are many organizations focused on the development of personal wealth using investment in start-ups and new business ventures. We call them Venture Capitalists. This banner is somewhat aggressive, and for some, can carry a negative connotation. So many high net worth individuals are banding together to create "Angel" groups. That sounds much nicer doesn't it? I envision ethereal winged beings of light and energy descending on me and my business to bestow capital from the vaults of altruism and hope.
These groups seem to be aimed at the very thing we need most in the US. We need innovation and new business to start moving the needle back to prosperity. We need America to get back to the business of making stuff, and doing things.
But let's get real- VCs, Angels, whatever you want to call them, are in it for one purpose- to make a return. And why not? That is the name of the game baby! Let's make as much money as possible while extending the minimum in resources, and energy. That's how we make profit!
But the chasm between the haves and the have-not's is so vast that, in many cases, the only way for those with creative ideas and effective business models to pass though the door of prosperity (assuming they do not have high degree of personal wealth) is to sell off a piece, or most of the pie to these types of investors.
Borrowing isn't really an option anymore either. The current banking and financial crisis has manifested in such a way as to make the bankers loose their damn minds. The person of average means can hardly get a business loan or a home loan today. And if they can, they probably do not want to. For many, the only way a business person can qualify for a loan today is if they have enough assets that they do not really need one in the first place.
The financial services industry has turned off the money faucet. Too many bad loans, or haven't you heard? They bought insurance to cover the bad debt, but then the insurance company was "too big to fail".
The financial services industry has turned off the money faucet. Too many bad loans, or haven't you heard? They bought insurance to cover the bad debt, but then the insurance company was "too big to fail".
SBA, a program supposedly aimed at helping American entrepreneurs, can't really help either. Unfortunately, programs are only "good enough". They don't go deep enough and they don't apply the types of rigor needed to truly analyze and identify barriers to success for entrepreneurs. They are wrought with books, information, fliers, web sites, and all kinds of information, but virtually no individualized help for the entrepreneur to actually apply this information to their business or idea. The issue is not curriculum, it's knowledge transfer. The best these programs can do is to find volunteers to mentor entrepreneurs.
I'm sure that some of these volunteers are great, and some have undoubtedly helped entrepreneurs do great things. But you get what you pay for. And I know entrepreneurs who have participated in these programs who tell me they feel uncomfortable asking for too much help from these mentors. After all, they are volunteers. So, as is often the case with state sponsored programs, good enough, is just good enough.
Anyway, we are left with this alternative of a burgeoning cottage industry of investment capital. Investment into companies for one main purpose- to exit. To leave. To stop.
The very idea that business can or should be created for any other purpose than to sell is thought of as foolish, quaint, "old-timey".
"Everyone sells", is what one venture capitol expert said at a recent conference I attended. "It might take 50 years, but everyone sells". This might be the most cynical, and saddest affront to the American dream I've ever heard. The "American Dream" had been hijacked and twisted into something that aspires to a ridiculous notion that everyone can be filthy rich. That is NOT the American dream. The American dream is that each of us can pursue happiness, with dignity. How in the hell did that become "filthy rich" only?
I know many VCs. I know many Angels. This post is not meant to be an affront to them. Money makes the world go 'round. My point is this:
Rather than exclusively creating business for business sake, expecting the big pay day, working toward the "exit"... what if, and this is going to sound crazy so bear with me...
What if we tried going back to developing businesses designed to help the owners to make a living with dignity, rather than to cash out? What if we worked to support business models that are built to serve a neighborhood, rather than a pan-global scalable enterprise? What if we focus on creating an ecosystem that fosters business development with, gulp, no exit?
Would it really be hell?
"Everyone sells", is what one venture capitol expert said at a recent conference I attended. "It might take 50 years, but everyone sells". This might be the most cynical, and saddest affront to the American dream I've ever heard. The "American Dream" had been hijacked and twisted into something that aspires to a ridiculous notion that everyone can be filthy rich. That is NOT the American dream. The American dream is that each of us can pursue happiness, with dignity. How in the hell did that become "filthy rich" only?
I know many VCs. I know many Angels. This post is not meant to be an affront to them. Money makes the world go 'round. My point is this:
Rather than exclusively creating business for business sake, expecting the big pay day, working toward the "exit"... what if, and this is going to sound crazy so bear with me...
What if we tried going back to developing businesses designed to help the owners to make a living with dignity, rather than to cash out? What if we worked to support business models that are built to serve a neighborhood, rather than a pan-global scalable enterprise? What if we focus on creating an ecosystem that fosters business development with, gulp, no exit?
Would it really be hell?
