When the idea is too small for VCs

Robert Ochtel writes a great articel about which companies are good VC targets:
Venture Capital – It’s Not “Welfare” for Start-up Companies

Hi conclusions are great and most of them apply to any venture of any size. Mainly:

1) Look at the business from the investor point of view and not from the founders prespective
2) Acquire customers early and often
3) Focus on clients rather than technologies or processes

He makes another point that some companies that will reach a plateau of say 5M$ revenue after 5 years are great lifestyle companies for their founders and not a good venture capital investment.

One of the main reason is that executing a deal is a costly endeavour both from the due diligence and legal and maintenance perspective.

We believe that small injections of talent-funds do not require as much overhead, because of a number of reasons:

1) Investment is less, so the risk of making a mistake is less
2) The talent will discover a lot about the realities of the business while working and can pull back early
3) Since multiple poeple are investing small amounts wisdom of crowd mechanisms will evolve as opposed to big bang approch of traditional VCs.

Call us at liquidcapitalism at google dot com.