VC and the long tail

I love the whole Long Tail concept, and I saw a story and a chart that made me wonder if the concept could be applied to VCs.

…what success there has been in the venture industry has been highly concentrated among fewer than 40 venture firms.

So, the big “hits” of the VC world do very well, but after that they have not been doing well at all. This is important to note in this blog, because there may be some people who think they could self-finance a startup, but you think you have as a backup plan of going to a small VC firm and getting an investment.

If your goal is just to get back what you put into the business, I guess that’s OK. If your goal is to make your company something that really does change the world, well, then you are in trouble.

If you’ve got a big expensive idea, position it so that you can get one of the biggest and best VCs in the country to buy in. Go big or go home.

If you’ve got a big idea that can be created for a lot less money and funded significantly by sales, that’s awesome. That’s why we’re here. But don’t have some small VC as your backup plan. Don’t move up to the curve part of the tail, that’s a recipe for heartbreak. You may need to move a little to the left on the curve, up to an Angel, but there are lots of good Angels out there.


In my second go around as a Credit Card-Self-Venture-Capitalist.