Sramana continues to make a very valid point about the disruption in Silicon Valley is increasingly less about the technology innovations and more about how these companies are financed.
Venturebeat reports that Foundation Capital has raised a $750 Million new fund. The firm’s last fund was $525 million, closed two years ago. Goes back to my question: Who are the real VCs of Silicon Valley? How can you practice true venture capital if you have to put so much money to work?
I moderated a panel on venture capital at Defrag last year with Jeff Clavier, Brad Feld, and Albert Wenger. Clavier, who is referred to in Sramana’s Forbes post, has been a very active angel here in the Valley, so I posed the question to him first. I asked what he was doing differently from institutional VCs to not only put a good amount of capital to work but also generate a considerable number of exits in a very short period of time. Jeff’s answer was typically understated.
My premise to the question is Brad and Jeff in particular (I don’t know Albert well) are smart investors who don’t follow trends. They invest in people and with a premise about what is happening to shift behaviors and spend, they don’t invest with any foresight about what Google or Microsoft is going to buy. This is the thing about angels that has always intrigued me, they are not lacking in imagination and have a much higher risk threshold than venture capital firms despite the fact that they are literally investing their own money.
I wrote about this a few years ago, there has been a big shift in the role and influence that angel investors have in this tech economy.