IP: Venturing under the influence

[David Farber <farber () cis upenn edu>]

CATCH OF THE DAY: Venturing under the influence

The majority of the meetings I take are with CEOs from
startup companies with giddy business models. And while,
yes, there is some rationale to being exuberant, especially
if you're building an Internet company, lately things have
been getting out of hand. Oddball businesses get funded, go
public, make zillionaires of their founders. Who's
responsible? All of us. But the giddiness starts with the
venture funds. Peter Ziebelman, general partner at 21st
Century Internet Venture Partners, calls it "venture under
the influence" -- VUI.

Perhaps you recognize these symptoms of VUI:
1. Loss of judgment: Funding a company with a bad business
model -- or none at all.
2. Lack of taste: Being attracted to a business that's
completely unoriginal or has no barriers to entry.
3. Drunken buddy syndrome, a.k.a., "Due diligence is for
wimps": Investing in companies you'd never dream of
investing in by yourself, but what the heck, the other VCs
are, so you might as well, too.

Please, for the sake of yourself and the economy, invest
wisely.

- Rafe Needleman, rafe-needleman () redherring com
   Editor, http://www.redherring.com