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Friday, June 08, 2007

Marc Andreessen On Venture Capitalists

Marc Andreessen, the well known cofounder of Netscape writes about the role of venture capitalists in the business society and about the divergent approaches of the VC industry. He is someone to listen to given that he has raised finance few times and is a limited partner in a number of funds. He starts by pointing out that any business that is built for leverage that could be sold or go public in 4 to 6 years should strongly consider raising professional venture capital, for three reasons:
- First, you get the cash to invest in the business and grow it at the speed required to realize its full potential.
- Second, you get that cash from a professional investor who invests in this kind of business as her full-time job and reason for existence in the world.
- Third, in the best case, you will get help building your high-growth business from the venture capital partner you take money from

He pointsout that there are pros and cons to working with any of these kinds of partners.
For example, VCs with operating experience are great when it comes to sitting down and talking about how to run a business, but sometimes they have less perspective (because their career was probably focused on one or two companies, whereas a professional VC has probably invested in 30+ companies), and they may have trouble keeping their hands off the steering wheel.
The best VCs get to improve society in two ways: by helping new companies take shape and contribute new technologies and medical cures into the world, and by helping universities and foundations execute their missions to educate and improve people's lives. We should not only be thankful that we live in a world in which VCs exist, we should hope that VCs succeed and flourish for decades and centuries to come, because the companies they fund can do so much good in the world -- and as we have seen, a lot of the financial gains that result flow into the coffers of nonprofit institutions that themselves do huge good in the world.

This is slightly different from what Guy had to say about the venture cpaitalists. One would have to agree about the contributions made by VC in the growth of several industries and for multiplying business options for business, consumers and business expecutives. As I pointed out earlier, Reputable venture capital firms also play an information-brokerage role that is vital to young companies. In their early stages, companies are insecure and opt for secrecy to protect their competitive position. Venture capitalists, in their role as trusted intermediaries, can act in a variety of ways on behalf of the company--from assisting in recruiting executive officers to striking up strategic alliancesToday, enterprises want innovation. And enterprises continue to spend billions on IT products year after and there are still many unsolved problems in business computing & notes that there is a lot of innovation to come in this industry & predicts that the enterprise software companies that move to innovate and dominate today will be the most successful companies five years from now

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