Another great example of my "Talent is more expensive than capital" mantra.
Talking with a gentleman this morning who both understands the power of talent and is a Venture Capitalist. The game is back on in the land of venture capital. There is a lot of capital chasing a lot of deals. Other than the deal sheet (the cost of capital), there is little to differentiate one VC from another. Except talent (which in this case I define as the nexus of market insight, wise perspective, operational experience and emotional intelligence that produces tangible results for the business).
This gentleman explained that start-ups are starting to look for the "old model." They want a VC who will bring as much (or more) "talent" to the deal (and be willing to “spend” it liberally) as they will offer money.
What does this mean? It means that start-ups are going to be willing to pay more for having talented board member, mentor, corporate leader and spokesperson than the will for the right deal structure. VC’s should take notice and start thinking about changing their model to separate the role of the business talent from the role of capital (read: risk) manager. This functional model would yield them greater returns. Just like recruiting organizations should look at bringing more business-partner experience to the table and creating a functional separation between the consultant, recruiter, sourcing and coordination roles. (An interesting parallel: match those roles to Gladwell’s connectors / sourcers, mavens / consultants, salespeople / recruiters).
Talent is more expensive than capital.
Great Post.
I am going to send a link to this post out today in my semiconductorjobs.com newsletter to see if we can get some additional feedback on this. Many of the readers of my newsletter are part of startup companies. Should be interesting.
Jason
Posted by: Jason Davis | March 10, 2005 at 08:05 AM