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December 01, 2009

Is there room for another model in the VC investment world?

So the barrage against Revolutionary Angels continues.  Seth Levine has his part II post up responding to the Xconomy article, in which the Angels CEO Chris Hurley, responded to the charges of scam artistry leveled by more than just Seth in the VC world. I wrote about my feelings on this the other day as well. Seth does a good job of responding to Hurley’s remarks in his blog, based upon Seth’s view of the world as a VC.

Upon further reflection I think that Hurley and the Revolutionary Angels have made a critical mistake. They are apologizing for what they are!  They are letting themselves be judged by the traditional VC’s yardstick. BTW, this from an industry that has more than its share of people saying that it is a broken and flawed model itself.  If I were Hurely I would not be apologetic at all about it.  I would respond “your damned right we make money off of doing this!”  The same way that VC’s make oogles of money doing what they do.  Maybe the RA (revolutionary angels) model is different, but at the end of the day everyone is making money off of the entrepreneurs backs, as well as from the hard working people who toil away at these companies. How many of you have heard from VCs how they bring more than just capital to the equation? How many actually have brought more than just capital? Hurely should just say that the VC model doesn’t work for everyone. That if there is not a place for for an RA type of service, it won’t succeed.  Let the Ayn Rand, Atlas Shrugged - loving VC’s be judged by their own credo. The market will determine whether the RA model deserves to live or not. VC’s crying over what a rip off to the poor entrepreneurs just rings hollow to me. How many times have you seen VC's leave money on the table? They play by the same self-serving instincts as the rest of us do, maybe even more.

i find the whole, “well we are giving advice for free” thing bull crap too. How many of you have ever gotten advice from a VC?  Did you find it extremely helpful or did you smile, nod along and humor them figuring that at some point you may be able to come back and ask for money again? Do you think the advice from Hurley and company is going to be any less or more useful?  I say RA should say the VC’s are just resistant to any change that may take them out of the equation and anything that upsets the status quo.  I would have Hurley star in the a new 1984/Macintosh commercial throwing the hammer through the screen showing big brother VC!

Now keep in mind that I am friends with many VCs. Brad Feld (Happy Birthday Brad!) is a dear friend and I do truly value any advice and help he gives me (which has been lots over the years). I know Seth as well and he is a great guy, always trying to help his portfolio companies and others.  But I just see a resistance to changing the status quo here.  The RA model doesn’t need VC’s crapping on it. If it provides value it will succeed, if it does not, it will fail.  If it fails, but causes enough consternation among VCs that they improve the way they do business, that may not be a bad thing either!

(Luckily I don’t think my next company will need VC funding so I am not afraid to write this:-) )

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