VC Cliche of the Week

Q. What is the venture capitalists’ favorite sight coming into his office?

A. A serial entrepreneur.

What is a serial entrepreneur?  It’s a person who can’t stop starting companies.  A person who has done it at least two or three times.  A person who has been very successful at starting companies and enjoys doing it so much that they can’t stop themselves.

I’ve said this before and I’ll say it again.  The raw material for venture capital is entrepreneurs. Without them, we have no business.

So the ones who are the most experienced, the most passionate, and the most successful are the diamonds of the raw material of the venture capital business.

I love serial entrepreneurs.  I haven’t met a VC who doesn’t.

I was insprired to make serial entrepreneurs my cliche of the week by this blog post on Artists vs. Entrepreneurs.  Here is the part of the post that inspired me:

there emerges a huge problem- entrepreneurs are indeed
very much like recording artists- except they get far worse of a deal.
Whilst painters, musicians and sculptors may have the opportunity to
produce hundreds if not thousands of works prior to seeing maybe three
or four become really valuable and accepted, entrepreneurs are limited
by nature of their art to making maybe four to six works over their
career.

Whilst of course the above is not news for anybody, this severe
concentration of risk that entrepreneurs face is a huge, huge problem-
probably not for the economy- but for entrepreneurs them selves. Can
you imagine if the Beatles produced one record in the beggining of
their careers and refused to make anymore because that make would mean
they were unfocused? I think, over time, an approach that effectively
deals with uncertainties faced by founders will creep in to become a
more widely accepted way of doing business.

I agree with the person (in australia?) who wrote this post.  The best serial entrpreneurs will probably figure out how to do more than four to six startups in their careers, but the four to six number is probably a good one to work with.

The upside for entrepreneurs on each deal is a lot higher than the VC’s upside, but the portfolio diversification that VCs get is a lot more attractive than the "concentration risk" that the entreprenerus face.

This makes me think that serial entrepreneurs do it for the fun and passion not so much for the money.  Every day, I wake up and thank god there are people who love starting companies so much that they accept the risk and go for it, time and time again.