What’s Venture 2.0? Does It Exist?

I’m looking forward to the series of posts that Peter Rip, managing director at Leapfrog Ventures, has begun writing on his blog.

I’m simplifying for the sake of brevity, so please visit Rip’s site for the complete picture, but Rip’s basic thesis is that the technology-related venture-capital industry is broken and needs desperately to be fixed.

The assumptions, methodologies, and practices that worked well in the past, Rip posts, are not working now. The cycle on which they all were predicated has been shattered, and that has left the VC business in a strange new world, without the benefit of a reliable map or a functioning compass.

Here’s an excerpt of Rip’s first post that ought to whet your appetite, as it has done mine, for what will follow:

. . . . The thesis of these essays is that the venture cycle has fundamentally changed for Information Technology and that formulae that worked over the past 20-30 years no longer broadly apply.

  • Globalization is both a risk and an opportunity with venture branding.
  • Capital is no longer scarce, nor is access to venture capitalists.
  • Information technology is no longer rarified and, in many cases, it is inexpensive.
  • Global 2000 Enterprises, once the ‘go to’ customer for any fledgling IT startups, no longer have the risk profile they once had for IT innovation.

As I said, these observations are not new, nor are they particularly insightful.  And some firms are already responding.  The move to Cleantech is a move to exit IT (or diversify) to find alternative industries.  The move to build Indian and Chinese outposts are brand extensions.

So, what does it all mean — for venture capitalists, for entrepreneurs, for the industry at large? Is there a Venture Capital 2.0? If so, what will it look like, and how will it differ from its predecessor?

Let’s see whether Rip can sketch an outline for us.

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