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Businesses The Almighty Buck

Where Have All the Venture Capitalists Gone? 90

Posted by Cliff from the show-me-tha-money dept.
artlu asks: "I have a great idea for a dotcom company, and I just started to execute the initial stages of my business plan. I developed the initial website, gained a user base, and am about to incorporate in Florida. Now I need to find a venture capitalist! However, every capitalist I approach is fearful of dotcoms. I ask the Slashdot community: How do I find a post-bubble dotcom investor?"
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Where Have All the Venture Capitalists Gone? More

Where Have All the Venture Capitalists Gone?

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  • Maybe it is you? (Score:5, Insightful)

    by passthecrackpipe ( 598773 ) * <passthecrackpipe.hotmail@com> on Tuesday June 15, 2004 @04:29AM (#9427687)
    There are still plenty of VC's around - and they have plenty of cash as well! Maybe it is you? Maybe they think your idea sucks? giving away more things for free? they know that that is an exceptionally difficult business model to pull off, and will only work when you have some exceptionally good services to give away.

    In your case, there is little that is unique, and you don't seem to have any USP's (unique selling points), anything that I can't already get elsewhere, as part of a larger service, and most importantly, readily visible revenue stream.

    I'm sorry to be blunt and harsh mate, but the VC's are still there, they are just talking to people with a better plan......

    • Re:Maybe it is you? (Score:5, Informative)

      by gazbo ( 517111 ) on Tuesday June 15, 2004 @06:36AM (#9427999)
      Agreed. As a specific example, what exactly does your site offer that The Motley Fool [fool.co.uk] (with a large user base and very high brand recognition) doesn't?

      What sort of capital are we talking? If it's around $30k or under, you should have no problem funding it yorself (I can easily raise that sort of capital myself through personal savings and personal loans; as a business one can easily receive more from the banks, not counting any business development grants available to you).

      If we're talking more, how are you going to pay them back? What are your revenue streams - looks like just ad-driven to me. So as a VC hoping to have made significant profit on my investment in 5 years, what is your forecast? How much do you expect to get from advertising per user? How many users are you going to attract? How many years will it take for this revenue stream to generate $200k profit, to make it worth their while.

      As with the parent, my intent is not to be negative, but as someone who is very much involved in the issues of keeping a business afloat, I think you need to come up with viable answers to these questions in the form of a solid business plan before you go asking for VC. And you have to truly belive that the business plan is feasible, else even if you did get VC you'd be opening yourself up for a miserable time.

      A more direct answer to your question, though, would be to attend events in the ICT sector. You'll find there are many agencies, all in a close-knit community, with the goal to support ICT companies. They will host events which are of no interest, but you can network, network, network. Once that's done, finding VCs will be no problem whatsoever, as everyone in the community will know everyone else.

      Oh, by the way - many people will be displeased that their information is being shared with a tracking company. At the least it looks very unprofessional. You're hosting PHP pages, bite the bullet and write the tracking code yourself.

    • There are still plenty of VC's around

      No kidding! You even tried Baystar? They will apparently invest in anything.

  • Try doing the following experiment (Score:3, Funny)

    by 0x54524F4C4C ( 712971 ) on Tuesday June 15, 2004 @04:30AM (#9427691)

    While standing in the front of your venture capitalist, turn 180 degrees so that he can see your back. So, put your pants (and underpants down) and try to touch your feet with the tips of your fingers. You can slightly open your legs to make it easy for your to touch your feet. Now wait for your new "venture" to start and enjoy. Good luck.

  • Why don't you tell the capitalist you can do it in 24 hours? [slashdot.org]
      • Why don't you tell the capitalist you can do it in 24 hours?
      I don't know which is scarier, that the did create a dotcom in 24 hours or that someone actually bid over $2000 to win it on Ebay! Maybe /. should get into this, we'd never need ads to pay for the hosting if it was done regularly. :)

  • just wait ... (Score:4, Funny)

    by straybullets ( 646076 ) on Tuesday June 15, 2004 @04:39AM (#9427713)

    The Future of Internet Investing is Coming.

  • See your own business plan (Score:3, Insightful)

    by geirt ( 55254 ) on Tuesday June 15, 2004 @04:39AM (#9427716)
    Since you are creating a web site for day traders, I think your business plan should include some info on how you can attract venture capitalists. If not, update your business plan.

  • Privacy Statement (Score:4, Insightful)

    by Gary Destruction ( 683101 ) * on Tuesday June 15, 2004 @04:39AM (#9427719) Journal
    You need a privacy statement. It's very important, especially for what you're doing.
  • Seriously though. They both exist, and have heaps of money because there's been nothing to invest in to speak of.

    However, the stupider ones are out of business, and the smarter ones are being a lot more careful in their dealings now.

  • If I were a venture capitalist... (Score:5, Informative)

    by afay ( 301708 ) on Tuesday June 15, 2004 @04:41AM (#9427724)
    ... I wouldn't give you money. Would you trust someone who advocated day trading to manage your investment well? I find it interesting that you quote Warren Buffet in your theory section when essentially you are going against everything that he stood for (regarding investments).

    Realize that in order to succeed you will lose - a lot. I lost $11,000 when I started out, but I think of that money as an education. Also, do not even attempt to day trade with less then $40,000 as you will need Day Trading Buying power. PAPER TRADE.

    How much did you end up making? If you did/are doing well, why are you changing professions (trader to dotcomer)? If not, why would I trust my money with you? (especially since you're losing your money in such a foolish manner--day trading)
    • Day trading?! Day trading?!!!

      This isn't the eighties you know. The banks have computers as well now. Day trading was a fancy get rich quick scheme that reduced the real value of a lot of shares. If you want to make money patent online day trading or something. You can do it regardless of any prior art here [uspto.gov]

  • Absent (Score:1)

    by Anonymous Coward
    I'm sorry, I don't have any answer to your question, except for a rather pessimistic view of things. So if you want lists of investors, read no further.

    Most VC:s in the seed/early financing business (which you seem to be looking for) are still licking their wounds after the IT and biotech bubbles - and won't go back there for a long time until there is a really really really good and obvious opportunity. Which, at this point in time, reduces the chances to almost zero, since everything that resembles "dotc

  • wow, this is too easy (Score:5, Funny)

    by mike_sucks ( 55259 ) on Tuesday June 15, 2004 @05:02AM (#9427782) Homepage
    1 - Ask Slashdot
    2 - ...
    3 - Profit!

  • yep, revenue model (Score:4, Funny)

    by foniksonik ( 573572 ) on Tuesday June 15, 2004 @05:09AM (#9427799) Homepage Journal
    Where's the money... seems like you're missing the basic idea, they want to make money. Unfortunately it's a big waste of my time to explain this to you, so.. good luck.

  • Simple.... (Score:2, Funny)

    by Steve Cox ( 207680 )
    Get a .org domain :)

    Steve.

    (BTW Its a joke comment. If I don't say this I will probably end up with a shed load of replies saying that a .org domain is inappropriate/not correct use/no one will find you yada yada yada... sheesh)
    • You are more right than you know. He refers to it as a dotcom on the website. Is there anything more likely to scare off even someone with more money than sense than calling it a dotcom these days? That's almost as bad as asking someone "Hey, wanna get in on the tail end of a great pyramid scheme?".

  • Me too! (Score:3, Informative)

    by Fizzl ( 209397 ) <fizzl@nosPam.fizzl.net> on Tuesday June 15, 2004 @05:35AM (#9427860) Homepage Journal
    Sounds like someone got carried away with the 24HDC... [slashdot.org]

    And he actually managed to get a plug on Slashdot. This is just slightly pathetic.

  • Congrats. (Score:1, Offtopic)

    by jotaeleemeese ( 303437 )
    Free advertisement in /.

    What a feat.

  • Maybe there's a reason why they're scared. (Score:5, Insightful)

    by rjh ( 40933 ) <rjh@sixdemonbag.org> on Tuesday June 15, 2004 @06:26AM (#9427980)
    Like, for instance, you're talking about a financial-securities website. If I were Joe Venture Capitalist and you came to me with a financial-securities idea, here are the questions I'd ask you before I'd even look at your business plan. Don't have good answers? Bye. Want your business plan back?
    • Who's representing you? Don't have legal counsel lined up? You're opening a securities firm and you don't have a securities lawyer hired? Buhbye.
    • Who among your executives is an SEC-licensed broker or agent? Nobody? Buhbye.
    • From where did you receive your MBA? Wait, you're trying to run a securities firm and you don't have an MBA in an executive position? Oh, right, right, you have "extensive trading experience". Right. Just like every other daytrader who lost his shirt. No MBA, no investment. Buhbye.
    • What services are you offering which nobody else offers? You aren't offering unique services? Buhbye.
    Those questions aren't nice, but those are questions which will be asked straightoff, and if you don't have good answers for them you won't even get your foot in the door.

    • Forget the MBA.... (Score:5, Informative)

      by hughk ( 248126 ) on Tuesday June 15, 2004 @10:07AM (#9429249) Journal
      MBAs can scare off VCs these days - you want relevant qualifications - this means trading or analysis. This actually goes with the SEC ticket point which I agree with. MBA expertise tends to be organised more around larger companies rather than startups. MBAs are too expensive for what they bring to have on the staff, however they may be fine to use on an advisory basis. I have heard a lot about business plans, 100 pages of BS is outdone by a few pages of relevant information, so you don't even need the MBA for that.

      As for the something different, I'm hundred per cent behind you on that one. If you don't have a product differentiator, you are dead - there is only so much market and somebody bigger always has economies of scale.

      • MBA expertise tends to be organised more around larger companies rather than startups.
        Right, which is why I think a VC/angel would want to see an MBA in a securities firm--not because the MBA is necessary for the company itself, but because the MBA is necessary to understanding the inner workings of the larger companies on which this startup will be reporting. Maybe I wasn't as clear about that as I should've been; my apologies.
        • I would disagree unless this is a specialist MBA. A lot of of the people I know who are doing analysis have some kind of CFA type background. An MBA is a bit of an alrounder which is why I wouldn't consider it so important.
      • If you don't have someone with an MBA on your board and executive team, you absolutely will not get up-to-bat, let alone to first base, with a VC, Angel, etc. It's like starting an engineered product company without having someone with an engineering degree. It can be done but nobody is going to bet their money on it.
        • Why the MBA? You don't need to have an MBA to develop a business plan for a small company and an MBA is definitely not necessarily a markets specialist (which is what the original poster was implying)?

          One of my previous jobs was establishing high-growth/high-tech markets. Many of the potential isuers that we talked to (remember, we are talking issuers, not startups or even mezzanine-stage companies) had established successful businesses. Those with Angels were getting quite good advice via active particip

          • I certainly agree: you don't absolutely need to be an MBA to write a business plan. You don't even need an engineering degree to do good engineering either. Attitude and "showing up" counts for 80% of success. :-) But 1) the degree does give knowledge advantages and 2) people read/presume ability into the piece of paper, justified or not.

            Does a marketing specialist need an MBA? It depends on the company, I guess. It depends on the person. Depends on the market they work in.

    • Foot in the door? It sounds like this guy hasn't even found the door yet...

  • Stop calling it that. (Score:4, Insightful)

    by DjReagan ( 143826 ) on Tuesday June 15, 2004 @06:53AM (#9428045)
    First thing you should do is stop calling it a "dotcom business". Many VCs got burnt by them 5 years ago, and now have an irrational phobia about the term.
    • Couldn't agree more. I did the rounds with various VCs a couple of years ago in an attempt to fund development of software that primarily communicated over the internet. Just mentioning "internet" made these folks turn pale...

      Calling your business a dotcom will likely have them burning you at the stake before you can use the word "leverage".
  • Take a look, at the selfdescription of the poster! About Him [artlu.net]

  • Hahaha. (Score:5, Funny)

    by Gannoc ( 210256 ) on Tuesday June 15, 2004 @08:00AM (#9428246)
    "I made a website, where's my fucking money???"
    • A cursory reading of the site shows that somebody *really* needs to learn more about effective copywriting. Even if the idea had some merit (it doesn't), the website does a piss poor job of presenting the case. It sure doesn't inspire *me* to want to use the service!

      If I were a Venture Capitalist, and somebody came to me looking for VC with something as poorly thought out as this, his ass would hit the middle of the parking lot by at least the second bounce.

  • Ask Slashdot: Where can I get free exposure? (Score:3, Funny)

    by truffle ( 37924 ) on Tuesday June 15, 2004 @08:23AM (#9428345) Homepage
    I've just started [link]a company[/link] and I'd like some free exposure from a heavily trafficked Web site. What question should I asked on Ask Slashdot to generate this exposure?

  • Where have all the VCs gone? (Score:4, Funny)

    by sakusha ( 441986 ) on Tuesday June 15, 2004 @08:49AM (#9428477)
    Where have all the VCs gone?
    Long time passing
    Where have all the VCs gone?
    Long time ago
    Where have all the VCs gone?
    Dotcoms fleeced them every one
    When will they ever learn?
    When will they ever learn?
    • An even crappier song, the GNU song [gnu.org], as sung by RMS. "Hackers, you'll be free"

      If you REALLY want to get a kick, rent "Revolution OS" from Netflix and watch RMS sing it. That is a great movie, also. Its got all the big open source giants and even describes the beginnings of the term "open source".

      Chris
      • AAAARRRRRRGGGGGHHHHH!!!!
        I couldn't hit XMMS's stop button fast enough!
      • Hey! Don't go labelling "Where Have All The Flowers Gone" is "crappy." Folk music isn't my scene, but I can't help but shed a tear when I hear Pete Seeger sing it. Maybe to appreciate it, you had to be alive during the Vietnam War era, and watched your high school buddies go off and get killed. Maybe you had to watch the newspapers for your draft number, hoping your birthday didn't get at the top of the draft lottery list. Maybe you will be appreciating this tune soon, when YOU get your new draft number an
    • sakusha, I salute thee! When I saw the headline, that's the first thing I thought of...

      Where have all the VCs gone?
      No more funding
      Where have all the VCs gone?
      Funding all gone
      Where have all the VCs gone?
      No more lovely Aeron chairs
      It seems that they have learned
      It seems that they have learned

  • This is a joke, right? (Score:5, Funny)

    by DorianGre ( 61847 ) on Tuesday June 15, 2004 @09:13AM (#9428697)
    No real plan. No unique concept. No market differentiation. No pressing need being met. No users clamoring for you to open. No revenue streams. No team to make it happen. No real business background. No exit strategy.

    If I were a VC I would bill you for wasting my time. There are plenty of VCs out there dying to invest their money as it has a shelf life that is coming due, but no one is stepping up with a good idea. And yours is not a good idea. A good idea had a $5-20 Billion market. A good idea can capture at least 5% of that market. A good idea fills a void in the market. A good idea has high switching costs for the end user, is hard to duplicate, is expensive to get into, has large margins, has the ability to block competitors through things like patents, leverages an already installed base, and makes you wet your pants it is so good. If you don't believe in your idea to invest your own money, money you may not have, put together a team, do the research, etc. - then why would a VC invest?

    I, for one, can't believe this got posted. Oh, wait, yes I can. Perhaps my next submission will be an Ask Slashdot: "How much will you pay for this turd."
    • I, for one, can't believe this got posted. Oh, wait, yes I can.

      From an editorial perspective, generally one doesn't care so much about "good" as "interesting". And although the question was, frankly, stupid, the ensuing game of pile-on-the-retard is fun for both participants and watchers. And the other gazillion half-wit potential entrepreneurs out there have a great opportunity to learn how to critique business ideas, including their own.
    • I applaud you, sir.

  • You need angels, not VCs (Score:4, Insightful)

    by JohnQPublic ( 158027 ) on Tuesday June 15, 2004 @11:12AM (#9430021)
    The VCs are out there, but you're not in their market anymore. Before the bubble, VCs didn't invest "seed capital", which is what you're looking for. After the bubble, VCs again don't do seed money, they're looking for companies that need "mezzanine financing" - companies with paying customers, good cash flow, and preferably a profitable quarter or two behind them. Companies that need money to grow instead of money to get started.

    Before the VCs squeezed them out of the market, there were "angel investors" - individuals who knew their specific industries very well, had made their own money previously and were willing to take a flyer on a new company in their industry. Angels typically require much less documentation etc. to invest.
  • Your site, although competent, seems thrown together in a rush. The color scheme is drab and the text is nigh-unreadable for your target audience (these are not designers you're catering to). That just won't cut it. And that's just your site (all you have to show for the time being).

    As for the copywriting: It's just unprofessional. You have neither a "corporate" reassuring voice (something desirable in this context) nor a friendly, personal one. It's just a mix and match of faux seriousness and half hearted attempts at humor. Needs tightening.

    From what I see, I wouldn't bet much on the business plan. Then, there's what everybody else here is saying: You don't have a unique product. No market differentiator, no apparent viable business model, no real professional experience (no, "tried and failed" doesn't cut it when requesting capital for a business providing services for the area in which you failed).

    I'm sorry, but I think the problem with your proposal is that it's not good enough. Good luck improving it.

    • You are overly harsh, in fact, I almost think you're a bit of a negative a**hole who simply cut down everything with a bit of criticism without giving some advice on the viable options.

      His site has deficiencies, but given that he's prototype-early-stage, that's not a problem, I've certainly seen worse. As for "doesn't have a unique product": offering a unique online service for group share schemes could well be it - can you name his competitors, since you've "obviously" done some research to support your c
      • You are overly harsh, in fact, I almost think you're a bit of a negative a**hole who simply cut down everything with a bit of criticism without giving some advice on the viable options.

        I'm not. I know what I'm talking about. I did remark on the flaws of design and copywriting, and a few specific points on why I think they don't work. I'm not going to write a 30 page report offering improvements that could be made, if that's what you're implying.

        His site has deficiencies, but given that he's prototype-ea
  • That is the first question you have have to answer. How are you going to make money with this site?
    What are you selling? How much will you charge? How many people will buy?
    Those are your questions when you have good answers then you will be of interest to VCs not before.

    • More important for this stage: How will your investors make money? Any time you take other people's money to fund a business, you should be thinking about how you'll pay them back with adequate returns. If you can't answer that, you shouldn't be asking for their money in the first place.

  • A Few Rebuts if I May (Score:3, Insightful)

    by artlu ( 265391 ) <artlu@a[ ]u.net ['rtl' in gap]> on Tuesday June 15, 2004 @11:42AM (#9430397) Homepage Journal
    First, the website that currently exists is not the business idea. It is the first step in my business plan. VCs have not been exposed to any of the true idea yet. The non-disclosure form was just finished by my attorney yesterday. I agree, the website is poorly designed, but I am just working on getting it running before developing it farther.
    Second, my about page on artlu.net. A) yes, it is stupid and childish. B) I have not updated it in nearly 4 years. C) If you are judging me by that page, I have nothing to say. I took it offline, but im sure you can google or internet history it.
    Third, I am working on the privacy policy as well - I don't remember which post mentioned that, so thank you.

    Finally, I appreciate all of the constructive comments and the emails I have received of interest. They are definitely leading me to change a few things in the Business plan.
    • VCs have not been exposed to any of the true idea yet. The non-disclosure form was just finished by my attorney yesterday.

      Well, this would probably be why any VCs that you've approached have appeared uninterested. Without an actual, written business plan (including stuff like an analysis of the competitive landscape, realistic capital requirements and revenue projections, etc.) as a starting point you won't be able to interest anybody in investing.

      Once you've done this part of the work, have a site tha

      • The thing is, I have not approached any VCs yet. That is why I asked the slashdot community. I was waiting until the Business Plan/Non-D form were complete, and now they are.
        • The thing is, I have not approached any VCs yet.

          Okay, then I guess I'm a bit confused, as your original post said: "[h]owever, every capitalist I approach is fearful of dotcoms," which I took to mean that you had approached VCs who then told you that they were fearful of dotcoms.

          From what I've been hearing (entirely second-hand, mind you), there is venture capital out there. And while VCs do require a high level of confidence that a business has potential before they'll invest, dotcoms with good ideas

    • hope there are no hard feelings, but honestly, if you want to have VC's invest in your company, your reputation will be of great importance. You need to give an impression of professionalism.
      Private pages have the inherent design feature of allowing people pre-judgement. That is the whole idea behind online publishing: presenting oneself to the public.

      You approaching slashdot was a great testrun, regarding what I have just said.
      I think you got a lot of great feedback. The unsupportive being even of grea
      • Thank you. I have received exactly what I was hoping to get from the slashdot community, and I forgot how much of a factor personal sites can have even if they are 6 years old (some of the pages anyway). I have some excellent suggestions, however, the suggestions saying to "stay away" from Day Trading is because people have not seen the business plan. I guess I just need a synonym for Day Trading besides: momentum trading, swing trading, etc.

        As I stated earlier, this website [groupshares.com] is just serving to create a

  • Not bad. (Score:4, Funny)

    by Joseph Vigneau ( 514 ) * on Tuesday June 15, 2004 @11:44AM (#9430409)
    Looks like his free ad on Slashdot is doing pretty well [extremetracking.com]
  • Perhaps if your site and idea didn't look like a PERFECT way to pump and dump stocks you would get more VC interest.

    Your site looks like a SEC investigation waiting to happen.
  • Lots of people run blogs/forums types of websites on the cheap. You don't need VC money to run that sort of thing.

    Honestly, I think you'd be in danger of blowing any VC funding on more day-trading "experience" and this time it would all be documented in your blog. Not a good thing, from a legal defense perspective.

  • my advice as an "average investor" (Score:1)

    by Anonymous Coward
    Well, I'm not a VC, and every computer project I've worked on has been self-funded. I don't think I would touch a project with VCs involved.

    When I buy a stock this is what I ask:

    1) how do they make money?
    2) how do they make MORE money each year?
    3) how will they be making more money 50 years from now?

    I'm having trouble coming up with answers for your site. Plus the whole day-trader angle bothers me.. is that the same philosophy you use when running a business? Maybe you will be able to sucker some VC, but

  • Try the National Venture Capital Association [nvca.org] or the Western Association of Venture Capitalists [wavc.net]. Both make their membership directories available.

  • into Hershey's Venture Capitalists n' Creme!
  • Tahya al-Moqawama al-Iraqiya!

    American pigs will pay... soon!

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