Venture capital firms the world over are run by some of the smartest people
But yet, we find dramatic shifts in their sentiments, and startups & sectors that were darlings only a few weeks or even days back are suddenly asked to prove that they really are worth something.
And this kind of dramatic sentiment shift isn’t a recent phenomenon.
I started a dot com way back in 1999 (an India specific search engine) and my firm was angel funded. I had seen the same sentiment then. In March 2000, my firm was given a term sheet for the next round by a top VC firm who flew down to meet us with half his entire team and literally pushed us to sign it (which we stupidly did not), only for the still unsigned offer to be withdrawn just four days later, citing adverse market sentiments.
In the context of the current sudden shift in the global investing sentiments, surely people with that amount of intellectual horsepower couldn’t have figured out something overnight that they had not been able to last few years?
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What is the reason for such rapid, global sentiment shifts? The answer is perhaps known to VCs and related finance fellows but most likely not to the hoi polloi.
Is it just the core philosophy of this sector, which demands that speed matters (more than anything else?), that they are willing to live with the boom – bust – boom – with nothing in between nature?
And, is there a tweak that can benefit all stakeholders?
