Fred: how do you feel about a template that makes it possible for mid-growth businesses (the 10-30%/year growth companies that aren't speeding to liquidity) to make returns to investors? Here's a first scratch I drew at that concept: http://michaelochurch.wordpress.com/2013/03/26/gervais-macle...
The idea is that extreme transparency in profit sharing and compensation makes it possible for the mid-growth businesses to kick back dividends to investors while still growing-- instead of several years later at a liquidity event that may never happen. Thus, investors are fairly treated and get to participate, financially, in a space of business (mid-growth) that's currently underbanked.
The VC ecosystem is pretty abominable, and I don't think it's because VCs are bad people. They're not. I think it has a lot more to do with the fact that these red-ocean gambits require huge, fast-growing companies, so it's a natural oligarchy. It requires businesses to swell to 100+ people before they have the cultural readiness to grow to that size while maintaining a decent culture (hence, most turn into cutthroat, horrid messes).
It seems like if we could come up with a structure that enables the financing of mid-growth businesses-- equity financing for the 10-30%/year growth companies with less risk of total failure, that could also use their slower growth to optimize for creative innovation and cultural health-- then everyone would win.
The idea is that extreme transparency in profit sharing and compensation makes it possible for the mid-growth businesses to kick back dividends to investors while still growing-- instead of several years later at a liquidity event that may never happen. Thus, investors are fairly treated and get to participate, financially, in a space of business (mid-growth) that's currently underbanked.
The VC ecosystem is pretty abominable, and I don't think it's because VCs are bad people. They're not. I think it has a lot more to do with the fact that these red-ocean gambits require huge, fast-growing companies, so it's a natural oligarchy. It requires businesses to swell to 100+ people before they have the cultural readiness to grow to that size while maintaining a decent culture (hence, most turn into cutthroat, horrid messes).
It seems like if we could come up with a structure that enables the financing of mid-growth businesses-- equity financing for the 10-30%/year growth companies with less risk of total failure, that could also use their slower growth to optimize for creative innovation and cultural health-- then everyone would win.