Last year, $163bn was invested into founders globally, compared to a $25–56bn range in the 10-year period to 2013. Corporate venture capital (CVC), whereby large firms invest in interesting startups, is on an upswing. CVC, traditionally a second-tier option for enterpreneurs, now represents about 18% of all venture deals globally and about a third of all dollars invested in venture. CVC of 2017 is bigger than the entire VC industry of 2013.How do you make sense of it?
During the 2016 IAAF World Junior Championships in Poland, Jess Thornton from Australia carried the weight of her nation as she attempted to win the 400m final leading up to the Rio Olympic Games.
Yet, in the midst of these Olympic-level stakes, just as the competitors came to the line, she took a moment to respectfully acknowledge Salwa Nasar from Bahrain. Nasar had recently made the heart-wrenching decision to leave her native Nigeria, where poverty robs young women of talent and potential, for the opportunity to break-out and flourish in Bahrain. Her choice was a refusal to leave her potential unrealized and Thorton’s brief moment of praise reverberated around the world.
The author of the New York Times bestseller The Lean Startup wants to reinvent how stock markets work. Everyone thinks he’s nuts. But we currently fund US innovation with Russian mafia money and autocratic sovereign wealth funds, so….
Equity markets are literally the beating heart of capitalism, and Eric Ries wants to reinvent them. Is he crazy, or on to something big? Read on (or watch the video) for one of the most stimulating and insight-laden sessions of this year’s Shift Forum.
John Battelle: All right. I’m really pleased that Eric Ries is coming and speaking with me. He has an idea for markets that is very important for all of us to consider. He’s well known, of course, for his book, “The Lean Startup,” and his follow-up to that book.
SVB’s Erik Peña on how China is different — and why it matters.
If you want to understand the future of business, you best study China. At the Shift Forum this past February, we asked Erik Peña to help us better understand the world’s fastest growing superpower. Below is the full transcript and video from his fascinating survey.
Erik Peña: Good evening. I wouldn’t call myself an expert in China, but I’ll give you a very quick overview on SVB to set the stage of our role in China. Then we’ll dive right into China, as soon as I figure out the clicker. There it is.
This series concludes with a hard look at why we need new sources of capital for founders
The final story in our premium Medium series from author (and software company founder) Luke Kanies explores the need for alternatives to our current system of venture capital. In Kanies’ words, our system looks stable, but most companies follow the same playbook: They try to get their investments to the magic number of $1 million in annual recurring revenue (ARR), raise an A round of funding, and keep on the funding train until you go public or go bust. This system forces founders to contort their companies to fit the funding schedule rather than discovering their own destinies. Kaines believes that instead of continuing to fund disruptors, VC will itself be disrupted with a better alternative.
When you decide to take your company public, you buy into a system that is far, far bigger than you. And as much as you may want to change the system, as a public company, you have to focus on your business and your shareholders first. That’s the law, enshrined in all corporate governance documents.
Now, governance can be rewritten, and Etsy, subject of a major Times profile this past weekend, had done just that. Before it went public, Etsy was a B Corporation, but as it prepared for the public markets, it decided to forgo the most stringent part of B Corp. certification — enshrining itself as a “PBC” — a public benefit corporation. Publicly traded PBCs are rarer than unicorns — there’s only one, Laureate Education, and, well, its stock isn’t exactly encouraging others to join the fray.
Look, we all see the same notifications, and figure, eh, we’ll get to that. But these pieces are really worth your time.
It was a good week for new stuff at NewCo Shift. We’ve got a surfeit of thoughtful commentary on AI, Valley culture, tech regulation, the non profit and NGO world, and much more.
NewCo Shift also sources and edits extraordinary stories into Medium’s membership area, which is on a “metered paywall” similar to the New York Times. Anyone can read them, until they hit their limit. We’re including them in our roundup so you know about this great work.
Let us know what you’re interested in us covering or pitch your own stories at firstname.lastname@example.org. And thanks for reading. It means a lot to us.
Our new series takes a hard look at how venture capital works, and finds positives — and plenty of negatives.
Our latest Medium Premium series from author (and software company founder) Luke Kanies delves into the details of how venture capital firms work, from how they raise and return capital to their investors, to why the best companies tend to partner with the most successful investors, causing the gains to accumulate in the top firms. The series also focuses on venture’s lack of diversity, and argues for new approaches to fix what has become a glaring deficiency.
Kanies’ work does not pull punches. He warns founders against raising capital unless they truly understand the deal they are agreeing to: You must manage your company to grow toward a highly unlikely exit, and in doing so, you will likely run your company into the ground. Venture capital, he argues, is structured in such a way as to deliver trauma to everyone involved. After all, this is an industry built around making many bets, but expecting most to fail. The first series warns that If You Take Venture Capital, You’re Forcing Your Company To Exit, while the second piece explains how the spoils of success will keep accumulating at the top. The next installment, due early next week, examines the problem of diversity in the sector.
But all is not gloom and doom in the world of venture capital. The series will soon shift to how we might build a more open market around investment and company creation. That way, venture capital can include, enrich, and benefit all parts of the economy.
Venture Capital firms don’t invest in industries to disrupt — they invest in industry disruptors, and many now support them operationally. Foundations should consider following suit.
I was recently interviewed by a collaborating team from three high profile foundations/LLCs. Their primary question: “How do we find and cultivate more breakthrough ideas in education?”
This question feels all too familiar from foundations today: a primary focus on ideas and issues, often at the expense of talent support and operational excellence. Grand challenges, RFP’s, and funder-borne calls to serve homegrown theories of change have established an unproductive power dynamic that stunts creative problem solving with grantees, inadvertently (and almost passive-aggressively) steering their efforts. Reporting requirements and restrictions with how dollars are to be used can be distracting, and even crippling.