I've always wondered if a tweaked version of the DARPA model might work for VC's. The gist is that DARPA hires a bunch of PhD's (to limited terms) to serve as program managers. The PhD's have an area of expertise and a research agenda, but not specific ideas. During their tenure, they think of specific projects and get a few tens of millions to fund them. Obviously for a VC you'd want to pin down ideas into more concrete, less blue-sky sorts of things with correspondingly smaller budgets.
I think the real benefit to the model is that you decouple idea generation from execution. The guy who is an expert in a particular field and can analyze the literature to see what can be done isn't necessarily the right guy to bring a product to market. Indeed, that expert doesn't necessarily want to take all the risk entailed in bringing a product to market, but may be the person best positioned to determine what can and can't be done.
My field (broadly, infosec) is disproportionately favored by DARPA, and I feel like the results from DARPA-funded work have been iffy at best. There's some standout work, but it floats in a sea of mediocre (or worse) stuff.
So here is the fundamental flaw in this model. Conflict of interest.
If I, as an entrepreneur, walk into the VCs doors to pitch them on something I have done and research I am doing - presumably without knowing that they have invested (or are investing in similar research with a view to taking that research into a commercial business) why should I feel comfortable knowing that they won't take my research and use it without me.
I know that a successful business is more than just 1 idea, but if two sets of eyes are looking at the same problem, both trying to build a business around it and 1 has some insight that the other doesn't....that's a competitive advantage. That could be used against the entrepreneur - given that VCs tend to not want to sign NDAs & non-competes before hearing pitches (understandably so).
So this whole VC investing in their own ideas, while also hearing pitches from founders....I am not too bullish on.
The potential for conflicts are just too great.
This is like having an EIR but worse....from the pitching entrepreneur's perspective anyway.
[+] [-] rayiner|13 years ago|reply
I think the real benefit to the model is that you decouple idea generation from execution. The guy who is an expert in a particular field and can analyze the literature to see what can be done isn't necessarily the right guy to bring a product to market. Indeed, that expert doesn't necessarily want to take all the risk entailed in bringing a product to market, but may be the person best positioned to determine what can and can't be done.
[+] [-] tptacek|13 years ago|reply
[+] [-] marcamillion|13 years ago|reply
If I, as an entrepreneur, walk into the VCs doors to pitch them on something I have done and research I am doing - presumably without knowing that they have invested (or are investing in similar research with a view to taking that research into a commercial business) why should I feel comfortable knowing that they won't take my research and use it without me.
I know that a successful business is more than just 1 idea, but if two sets of eyes are looking at the same problem, both trying to build a business around it and 1 has some insight that the other doesn't....that's a competitive advantage. That could be used against the entrepreneur - given that VCs tend to not want to sign NDAs & non-competes before hearing pitches (understandably so).
So this whole VC investing in their own ideas, while also hearing pitches from founders....I am not too bullish on.
The potential for conflicts are just too great.
This is like having an EIR but worse....from the pitching entrepreneur's perspective anyway.
[+] [-] milkshakes|13 years ago|reply
[+] [-] wfrick|13 years ago|reply