There is a nice statistic apparently showing that in the past three years no US-based venture capital (VC) firm has backed a silicon-focused start-up based around Palo Alto, while Asian groups have supported 38 in the region of California still called Silicon Valley.
In the week of social network Facebook’s $104bn flotation the statistic was a timely reminder of how far the Valley has moved from its hardware origins forty years earlier towards internet services, according to Timothy Barnes, director of UCL Enterprise Operations and UCL Advances at UK-based University College London, at a Start-Up Britain panel on corporate venturing.
What hasn’t changed over this time is the feeling that venture capital in the Valley is the only legitimate form of insider trading in the US. The original regular angel lunches saw "the group" based around Reid Dennis (who later founded Fireman’s Fund – now American Express’ – corporate venturing unit) come together to share technology dealflow. This led to professionals, such as Franklin Johnson, from VC firms coming together to support Stanford University’s sports teams by giving up selected deals to a university venturing fund.
This collegial feeling is in part a reflection of the aligned motivations for participants to help others and in return be helped when opportunity strikes or bad deals need to be passed on to dumb money. A social network, therefore, is no new thing but the spectacular returns on Facebook for its employees, as well as VC and corporate backers, show how aligned and complementary relatively disparate shareholders can be when a start-up is growing and its share price is increasing.
But as Matthew Mead, head of Nesta Investments, said at a Global Corporate Venturing Symposium panel on how to manage the disparate syndicates of the future, when things struggle diverse shareholder types can be a recipie for complications.
The only solution to managing shareholders with different exit and return horizons, as well as the differing added value they can bring to a business at different points in its life, is to build trust and communicate – something the titans of the industry have always realised.
And while social networks and electronic communications can spark ideas and new friendships, trust is usually only built through repeated interactions and a working relationship built at least in part in meetings.
The social and mobile space makes the potential contacts more geographically and sectorally dispersed, which, in turn, encourages the occasional need to meet up and swap ideas and business.
It was in this spirit of openness, differing viewpoints and connectivity that more than 200 corporate venturing executives attended our Tech Scout Challenge, Gala Awards and Symposium this week – for which thank you.
Or, as David Hume put it: "Truth spings from argument among good friends."