Howard Lovy provides a keen insight into the difficulty of acquiring funding for nanotechnology (and similar) start-ups by treating us to a rejection letter sent to a highly industrious and creative entrepreneur some time ago:
You tell many fanciful stories about what your technology may someday do, yet this "wheel" concept is still just a theory. I realize your team believes it is close to chiseling a proper shape for such a device, but even if a prototype leaves the laboracave, it would need to undergo a series of tests required by the Herd Council before approval could be granted. And we haven't even mentioned mass-production and standardization.
Also, have you ever even considered the societal and ethical implications of such a "wheel" on our society as a whole? Those things could rip up our hunting and grazing land, and even "roll" out of control, destroying all living things in its path.
Read the whole thing. It's both hilarious and sadly familiar.
Posted by Phil at October 17, 2003 10:16 AM | TrackBackI think it should be obvious by now that an inventor shouldn't become dependent on venture capital ("VC", I also use VC for "Venture Capitalist"). A well run VC fund can make your company better, but they don't magically come to your door merely because you came out with the latest wowie gadget. A poor one might come, but then they might spend more time trying to take control of your company rather than helping you run that company. That's assuming they understand the value of your invention (which we'll assume has value).
Ironically, if you have a company that can survive without VC, then you probably are in a good position to seek VC. You don't need them and hence you have a far better bargaining position. In fact, you may never want VC since that often results in a loss of control over your business and inventions.
Finally, there's the matter of reputation. If you have a reputation for running companies well at the startup level or for generating inventions that some other company can market, then you have something nontechnical that a VC can grasp. I think it's unfair to criticize these companies so severely. If they are really that incompetent (and some are), then they'll eventually lose those funds and get out of the business. The demand for VC is so great that the really competent ones can be real choosy.
Posted by: Karl Hallowell at October 19, 2003 10:00 AM