P.C. Revision of Previous Post…

May 3, 2015

Overly conservative and fearful.

That is the answer to the question…

Why do Midwestern investors miss out on all of the great startups, early stage and new innovative companies that launch in California, Seattle and New York ?

There is absolutely NO reason companies that are truly new, innovative and disruptive cannot be created and grow in the Midwest. Venture capital and angel investing pools do not form here, Why?

ALL Venture capital investors, angel investors and experienced entrepreneurs will tell you that there is no ability to pick a winner ahead of time, no way to spot the next billion $ company in advance, period. You will also observe that the majority of them achieving success had to leave home and go “there’ to make it happen, because of the 18th century mentality of their region.

A recent example is IMGUR.com founded in Athens Ohio By Alan Schaff a resident of Granville Ohio Attending “a college”. IMGUR.COM has over 130 million page views per month giving it a billion plus valuation in the marketplace. Andreessen Horowitz a true innovator in the venture capital space invested $40,000,000.00 in IMGUR for around 5%.  Out of Frustration Alan moved from Ohio to the fabled Silicon valley because the Athens, Marietta, Columbus Region was “no-where”.  And he was right what group of investors in Ohio would have invested in Alan at that valuation? none because?… Overly Conservative and Fearful.

Andreessen will most likely realize a  ten fold increase in the value of IMGUR in three years,  that Plus the founders equity could have stayed on Ohio.  Ohio University, TechGrowth, Ohio Tech-Angels, Rev1, Third Frontier, accredited private individuals and every VC fund all missed out on the one Unicorn to have emerged from the Ohio wilderness WHY ? Overly Conservative and Fearful.

Venture Capital in Ohio will say at one moment  “ yes, throwing darts at a chart” will have the same average we do” but then not invest in a startup because it does not match their “thesis”. OTAF, 3rd Frontier, etc etc know that only 1 in 1600 or so startups will ever be successful but they “go wild” by investing in a few hundred startups  OVER A DECADE!.  Now they suddenly realize in the waning year or so of a billion $ plus program that they had the wrong thesis since 70% of their “returns”* came from 30% of dollars invested and most of that in the last few years.  This result was pre-ordained and obvious to any entrepreneur who has ever started or run their own company as the boards, and managers were loaded up with government employees, Academics and lawyers with the vast majority of funds going to University programs.

Now here we are, Crowd funding by accredited and non-accredited alike is upon us, will Ohio and its Development departments, Politicians, Wealthy individuals, Banks, Endowments, Pension funds, Universities, “VC” funds fail again to embrace ture start up ventures and entrepreneurs, will they continue to be risk averse, overly conservative and non Entrepreneur focused ? Probably, know why…Overly Conservative and Fearful.

What about you ?



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