Cambridge Cluster

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Fred Wilson runs a post “The ‘We need To Own’ Baloney” stressing the only thing an investor, or I guess anyone else, needs to go for is a slice of a very large pie. InFred’s words:

The VC business is not about grabbing the largest slice of the pie. It is about getting involved with very big pies. If you let your need for the biggest piece keep you out of the pie eating contest, you will lose eventually.

So the VCs and other investors such as those on Dragons’ Den are barking up the wrong tree when they get obsessed about low valuations.  Will any of the investments made on Dragons’ Den make it very big?  But it is great TV.  Some will generate millions but Fred Wilson is building much bigger companies in a short time frame.  So the angel groups with which I co-invest are right to be generous to the entrepreneurs with high valuations in the early rounds because it gives the entrepreneurs a great start.  If the valuations drop later, it is never going to be a big pie so it never matters but you still need to think through your business plan resource.

Makes me sleep easier at night knowing that you do not have to be a pushy dragon to do well!