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Tuesday, March 10, 2009

The VC community should have a goal of investing in 50,000 startups

I just read this post on VCMike's blog explaining how good it feels to see VCs investing in innovation, as a bright spot in what is otherwise a dark moment for the economy.
While looking at 10 startups can make you feel good about the quality of innovation in this country, 10 startups are not going to create the many jobs we need.

In another similar post last week in Creative Capital, I read about VCs gathering for the VCIR conference. 300 people total gathered to look at no less than 22 companies as potential investments. Wow!

For comparison, the numbers I have seen on this are that in 2006, approximately $20B were invested by VCs, and the same amount invested by Angels.
With that money VCs invested in 700 early stage companies, and the funding gap was at about $6M (meaning they do not like to invest less than $6M on average)
With a similar $20B amount, Angels invested in 50,000 early stage companies.

This is what we are talking about. Real numbers for real impact. I would love to see VCs consider gearing themselves up to face this kind of challenge...

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