I read a Forbes article recently about the demise of the Venture Capital Industry, which as you know has invested in, incubated and launched some of the most valuable products, businesses and services we enjoy and take very much for granted today.
What was most shocking about the article is that the prime reason cited for the demise of Venture capital is that the industry has become too good at raising money, and they are having problems putting $30B to productive use each year. Yes, too much money is a problem for the venture capital industry. As a non-profit professional I could not imagine a better problem to have.
The magnitude of the assets at their disposal is just short of overwhelming. $30B dollars is 10% of the entire Charitable Giving industry. Its equivalent to 90 American Cancer Societies; 50 Nature Conservancies; or 300 ACLUs. But the industry chases investment returns, different than the aims of most charitable organizations. However there may be a way to generate investment returns and simultaneously meet defined charitable ends. This could be accomplished by investing directly in THE MOST PROMISING YOUNG MINDS IN AMERICA.
What I would propose is that VCs create an umbrella organization, similar to an entrepreneurial/math/science farm system, that identifies, recruits and mentors the most talented, motivated, and enthusiastic young people. The VCs would offer full tuition scholarships to these young minds, beginning in secondary school and continuing through graduate training, would provide mentoring in technical entrepreneurship/capital formation, involve young people in early technologies and provide exposure to promising start-ups in industries of expressed interest and/or natural aptitude. The investment returns come from a defined coupon/percentage of future earnings from the initial investment (sort of an equity position rather than a debt investment (i.e. student loans))
Major League Baseball and other athletic leagues do this already, think Premiere League Soccer in Europe, so why not apply the same logic to American brainpower? VCs could recruit at national competitions (Intel, FIRST Competitions, Science Fairs, etc.), via an as-yet created national talent identification network, or simply rely on other more established mediums (SATs, the college admissions system, etc.) Seems to me that VCs could easily place $15B of their capital "investments" on the 15,000 most talented people in America (at $1M/pp/yr - more on the mechanics of that later). And with time, seasoning and the right mix of rigorous education, mentoring and internship opportunities, return outsized - and most importantly - reliable dividends to hungry investors.
See VCs: Too much money is actually a GOOD problem to have!
As a Real Estate Investor I will check the main points of a property to see the condition of the property. As an Entrepreneur it is ultimately me that the donor, investor or lender is going to be sold on. After they are sure that the program is in order, I have to show what sets us apart from the 5,000 other Entrepreneurs that have good programs. Is there any information or studies done on what type of initial funding is the most successful over a 10 yr period? Are JV's more successful than VC's and so on.
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