Lack of Access: How does the average retail investor get access to the great successful funds? The barriers of entry are too high and conversely the successful funds don’t need capital from the small guy.

Lack of Transparency: There is a huge pent up demand to invest in start ups by individual investors. They search and scour for local angel funds, invest their money blindly and hope and pray they are part of a fund that has invested in the next great exit. Not a wise investment strategy.

Lack of Liquidity: The retail investor gets invested in the angel fund and then for whatever reason he wishes to cash in or redeem his investment. Dream on again. In most of these angel funds you are buried for years to come.

The Solution: The first publicly traded seed stage investment company – DTI Ventures- Democratizing Technology Investment.
Investors have access,transparency and most importantly liquidity.

I’m big supporter of crowdfunding and I believe a lot of financial systems will change in time to accommodate the public opinion on VC’s and LP’s alike. Regardless of the fact how VC’s and LP’s play together, the main objective is a healthy, high potential start-up. And exactly these are growing more and more reluctant to be subject of, how adequately described, this “squeezing”. If start-ups see an opportunity to achieve their goals without being squeezed financially and in their original vision and mission they will go for it. this… regardless the question if it is the best option for the technology development.

Sasa

Investors are being seduced by the dotcoms, because they typically don’t require big investments (like start-ups making physical products), and a handful of them have unbelievable returns. The professional VCs are supposed to know this, but they are just as easily sucked into the “this is going to be the next facebook” fantasy that they forget reality.

As for too much capital, that is a symptom of two things: the giant retirement funds of baby boomers (and even the following generation), and the inequitable distribution of wealth and income that has become even more distorted in the last decade. While pension funds and endowments may only invest 5% of their assets in VC funds, that’s still an enormous amount of money. And there are lots of 8-, 9-, and ten digit people out there who have nothing better to do with their money than recycling it (that is a good thing). It would just be better if the VCs returned to investing in companies that develop new technology, and not just new websites.

While that works for announcement journalist, funding and the next shiny, articles. In the long run feature companies become acquire hires and the industry comes to a grind, since the acquire hires have no strategic influence on the management of the acquirer. Which then keeps muddling in the intellectual circle they where in before. Until somebody passes the whole mess and obsoletes an industry’s thinking.

1. http://www.theatlantic.com/technology/archive/2012/05/the-pernicious-myth-that-slideshows-drive-traffic/256831/#.T6hRL0u6Zq4.twitter