Having raised around $14M in venture capital and (super) angel rounds, as an entrepreneur, I despised having to wade through an ocean of subprime venture capital investors who had no merit being in the business of innovation arbitrage.
I later, acting as a judge to an international venture capital competition (VCIC), discovered how these kids with easy money connections from top schools were trained to negotiate a deal without actually understanding the outlier value of the disruptive innovation at hand. Value drives valuation, is what they should have been taught, not the other way around.
That, along with how venture capitalists fundamentally misappropriated the risk of early-stage investing, demonstrated in no uncertain terms when the theory of innovation controlled and defined by its arbitrage is broken, the innovation they will discover is destined to be broken. For, in the words of Einstein, the theory determines what can be discovered.
The kind of innovation that sees the light of day today is not what defines the full scope and wherewithal of our entrepreneurial capacity, but is curtailed by the venture capital “nitwits“ who portray to be intellectually superior and are not as the evidence of their mediocre performance vis-a-vis the gaping greenfield for technology innovation demonstrates.
Innovation that drives humanitarian value is not the business of generating mind-numbing advertising clicks, fixing self-induced security risk, and fabricating socioeconomic foolery its arbitrage today portrays it to be.
Mind you; no venture capital investor could see the value of Tesla in its formative stages, some desperate VC firms hanging on to the company with the company’s foregone success now claiming many fathers. What happened to Tesla demonstrates exactly how venture capital cannot recognize outliers even when they have established track records. Indeed, venture capital investors have proven to be numb by theorem, both empirically and correlated to Greenfield.
Outlier entrepreneurs, without $90M of their own money to put in the deal, are bound to lose their shirt and become tagged as false negatives in talking with the vast number of venture investors, risk posers, who are not. A dumbing down of the investment thesis the result of not holding investors to the same meritocracy entrepreneurs are bound by.
Hence we must change how venture capital is allowed to ignore the rules of a meritocracy, for the arbitrage to start producing results commensurate with the wide-open opportunity for innovation that can and must improve humanity.