Venture Casino

This morning I woke up, looked by the window and suddenly realized that the landscape had dangerously changed over the past twelve months or so.

Dear entrepreneur, you’re maybe not realising it at this right moment, but the money you’ve just raised at a great valuation must be put at work to create real value on the long run. Do not forget that.

Investors have raised a lot of money over the past few years. New funds got into the game, some large ones got bigger, and the others have either raised their next vintage or decided to explore new grounds like seed funding.

So much liquidity creates an amazing land of many opportunities, especially for those who sell picks & shovels. While so many intermediaries are getting their fair share of fees, the unrealised gains are rising up as companies keep raising. Venture Capital firms send reports full of pride and potential returns to their Limited Partners. Entrepreneurs are raising more money than they could ever dream of, the valuations are rising up and people are bragging in the media. A positive, optimistic and euphoric attitude is leading the way…

To disenchantment, my friends.

Don’t get me wrong, I didn’t say the B. word. This thing is for people trying to win a clickbait competition. A bubble is when you sell a very large volume of something that doesn’t exist to people who believe that Santa Claus will give them free money for christmas, no strings attached.

Here, we just talk about a very small percentage from the outrageous pile of cash that is stacked up in the accounts of rich corporates and insurance companies, now getting spent (…more likely burnt at the moment) by ambitious investors and entrepreneurs determined to change the world… or something like that.

The greatness of Venture Capital

Unlike bubbles that leave a burnt land full of despair and misery behind them, the current situation, even though many investors and entrepreneurs will fail, is a real opportunity, notably for Europe.

From the abondance of liquidity in venture capital that is now poured into the economy will rise amazing companies. And this will be the consequence of bold, counter-intuitive, out-of-consensus decisions taken by people who can currently afford super high-risk/high-return bets.

The money doesn’t sleep anymore in the frozen accounts of rich groups, the latter are giving a chance to venture capital firms. the economy of tomorrow is fuelled to build future industry leaders and market makers. Those new organisations are moving fast, they are changing the way people work, they are changing the world we live in and in some extent we believe they will bring to us a brighter and more meaningful future.

(thanks Zuck, Gates, Buffet and others for giving up all your fortune to great causes btw…)

Yet we will pay the price of our optimism and amateurism

Unfortunately, there are too many miners in the quarry, and too many of them are amateurs who got there by accident and are now pumped up by the power and comfort of their situation. A time will come when we will pay the price of this greedy quest.

Entrepreneurs are rough diamonds, often uneducated to manage the millions they have raised and to grow their company. They learn it the hard way as too many investors fail at providing the necessary support while pushing them to take as much money as they can so they can just burn it along the way…

Do not forget the primitive of every organisation. You have raised money that you are now burning. And as you run to reach the next milestone of your journey, you must build a sustainable organisation. It’s a long, non predictable and hard path. It requires to be surrounded by amazing people aligned with the vision to find a model that fits around a stellar product that your customers are delighted to use and buy.

Too many entrepreneurs and investors got their ticket for Startup Lalaland and are suiting up with great costumes and pink glasses. They are dancing, drinking and playing casino. Many of them will wake up with a terrible hangover, pissed off investors (both General Partners and Limited Partners) and no more money for party…

Good luck :)