How to Spot Subprime VC
Subprime venture capital, as I described in an earlier post, is easily recognizable Here are some of my metrics. Run for the hills whenever an investor...: 1. Seems more interested in how it is built rather than what the disruptive business proposition is. Innovation becomes successful when it marries macro-economic value with micro-economic (technology) execution. Technology risk is the least of our worries in Silicon Valley, yet fundamental disruption is crucial and should take up the majority of the discussion. 2. Seems more worried about cost of development than cost of greenfield customer acquisition. Capital efficiency is a buzz-word investors love to throw around. In most cases they want you to be as cheap as possible. But capital efficiency is relative to the cost and value of customer acquisition. Not all venture capital deals start with a seed round below $250K -- more disruptive innovation usually
