Musings on Entrepreneurship and Innovation
Monday, June 07, 2004VC Affiliate Networks: Smarter Money
Recently, Tony Perkins interviewed Tim Draper of Draper Fisher Jurveston:
We have about 14 affiliates in 26 cities around the world. These are early-stage funds that all work together and help each other to make various companies successful. Everybody owns a piece of each other. And it turns out it works pretty well, and it has been fantastic for contacts for entrepreneurs. Entrepreneurs come to us because they know they can be introduced to pretty much anybody on the planet.
There is nothing new about VC syndication networks, nor is their anything unique about investor collaborations dominated by a single, lead investor. However, there is something new and interesting about the emergence of more formal, more egalitarian affiliate groups like that organized by DFJ and Village Ventures and envisioned by Garage Technology Ventures.
On the one hand, venture capital is subject to economies of size. However, value creation is more a function of intelligence than of scale. In a networked world, intelligence migrates to the center and to the periphery. DFJ, Village Ventures, and Garage clearly believe that they can provide a kind of "core" intelligence that has value when connected to the local and specialized intelligence of affiliates at the "periphery." Quite literally, networked venture capital can be smarter money.
