Venture capitalists today, more than ever, need to be talent scout, says Saad Khan, in a guest article for Forbes. Khan is a partner at the venture capital firm of CMEA Capital where he leads CMEA’s Web, digital media, and twinkle-stage investments in Pixazza, Blekko and Jobvite.
As incubators for embryonic companies, venture capitalists have to think in terms of the people they are investing in. Especially since many start-ups, particularly in technology, “pivot” a few times from their original idea. Many times the idea you invest in is not what the company ultimately ends up doing, he says.
For example, Rich Skrenta, a hacker of some renown and serial entrepreneur, is the type of entrepreneur Khan says is working banking on. Skrenta’s early successes included being a high-tech prodigy by ninth grade and later launching start-ups such as NewHoo (subsequently the Netscape Open Directory) and Topix.
Khan’s point: “I want to invest in the innate drive, talent and potential of a person. I want to invest in what they’re working on now, what they’re thinking about next, and whatever they dream up in the future. When it comes to exceptional talent, I’ve stopped worrying about technology, market sizes, product-market fit, etc.”
Khan likens his style of venture capital investing to the MacArthur “Genius Awards,” the $500,000 grant given by the MacArthur Foundation to exceptional people to work on projects of their choosing.
What’s your philosophy? Can venture capital investing really be more like an equity investment in a person’s intellectual future? Can one ignore the business plan and financial models and simply give brilliant people the opportunity to succeed? Add your comments below.
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