(A VC) -- There was a great conversation Thursday at Y Combinator's AngelConf in Silicon Valley. Anthony Ha of Venturebeat had a couple posts on it that I just read, one on Paul Graham's comments, and another on Ron Conway and Mike Arrington's comments. I would have enjoyed being part of that discussion, so I'll join in now.
I second Ron Conway's hope that "any entrepreneur that has 'the guts' to start a company gets funded." That is my kind of thinking. We need more entrepreneurship, not less.
So I'm with Ron 100% on this. Of course, getting funded does not means tens of millions of dollars of funding for every entrepreneur. It means enough funding to actually build something and see if the idea works and the team has the right stuff to build a company. Then market forces should take over and determine what ideas and teams get more funding, and which ones should close the doors and think about what is next for them.
Mike Arrington expressed the contrary opinion, apparently held by many VCs (not me), that this mini explosion in angel investing is creating a bunch of "dipshit companies."
I don't know what a dipshit company is. I haven't seen one. If you listen to the chatter on Techcrunch's comment threads, you will see that people think Twitter and Foursquare are dipshit companies. Fine. Many great companies have been built on a wall of derision, and I personally think those two are going to join that list of laughed-at great companies (and maybe already have).
My point is you just don't know what is a crazy idea and what is a brilliant idea. And you don't know what is a great team and what is a weak team.
Of course, we have our opinions on that. We make those judgment calls every day. But we are often wrong. Venture capitalists are wrong more often than they are right. It is good for VCs if 10x or 100x companies get angel funding. That is more opportunity for us.
Paul Graham rightly points out that that there is a "larger trend where founders have more power than investors." I've been saying that on this blog for a long time. And I also agree that founders are determining the financing structures that make the most sense for them. But I do not agree with Paul's opinion that the notion of a "lead investor" is going away and that is good for entrepreneurs.
This may just be me being defensive and protective of my chosen role. I am a lead investor. It is what I do. I don't follow very well. I like to get behind an entrepreneur and company and help them raise capital, hire a team, and build the business.
And I think the entrepreneur needs a lead investor to play this role. Obviously they should pick a lead investor that will not "screw them over" -- and sadly, too many times lead investors do just that. But there are many high quality VCs out there. Thanks to the power of blogging and social media and the Web, you can find out who they are and who to avoid.
Roger Ehrenberg had a great post on this yesterday. He says: "Coming to the table as a two- or three-headed syndicate beast without a clear leader is a big, big mistake. How many VCs like investing into situations where there is 'management by committee?' Answer: zero. Why should syndicate-building be any different?"
Just like the entrepreneur needs to run the business, he or she should find an investor to run the investor group. If you don't want a lead investor, then don't knock on my door, because I don't know any other way to be.
Fred Wilson is a managing partner at Union Square Ventures in New York City and the author of A VC, where a version of this article first appeared.
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