…At least when it comes to Innovation and the Venture Capital community? In times of trouble, organizations tend to do two things – 1) Conserve cash and 2) Focus on what you know. This makes perfect sense for most corporates but when it applies to a community that is considered by many as being the lifeblood of innovation, perhaps we need to rethink our rules?
Recent commentary has suggested that the VC Outlook in the near to medium term is weak and that the appetite for risk in the industry as a whole is declining. Much of this is understandable given the proliferation of venture firms and funds of funds, the (temporary) death of the IPO and multi-industry wide slowdowns. Simply put, there is just too much money chasing too few investments with not enough light at the end of the payback tunnel.
Or is that really the case? Another school of thought is that while the economic issues are very real and we will likely see a number of VCs disappear in the next 18 to 20 months, the reality is that many firms are essentially becoming risk averse (most notably argued by Timothy Draper at the International Business Forum venture capital conference last week). Many VCs are chasing after the same ideas or are becoming very provincial from a geographic investment perspective (too US-centric).
The implication is that the next boom will not be centered in Silicon Valley but elsewhere across the globe, where innovation is being pushed harder and faster.
From the perspective of our global village, this is quite the cause for optimism, and national sentiments aside (though I’m not entirely convinced that the US won’t drive a lot of the innovation again), suggests a couple of key takeaways, as summed up excellently by The Stimulist: The time for innovation is indeed now – when times seem darkest.
From a pure wealth creation perspective, this is the time to plant the seeds of success, when the ‘arbitrage’ opportunity is at its highest. In addition, we are seeing something of a political, social and economic alignment, especially when it comes to anything ‘green’, ‘cleantech’, etc., suggesting that the avenues to massive prosperity (material and otherwise) lies in a path that will ultimately better both us as individuals and business people, and the planet.
Plenty of cause for optimism…perhaps we need to rethink our perspective on (and appetite for) risk?