On being an API to Venture Capital and Functional Expertise

Written by Paul on August 9th, 2012

I’ve been thinking about this idea for a while: that it’s *everyone’s* job to be an API to venture capital and functional expertise. (Though, I owe a big hat tip to Fred Destin for being the first to publicly use the “API” term to describe 500.)

If you’re a startup founder, your sole job is to build a fantastic business. Rather than spend time organizing the next local startup grind or some such nonsense, spend your time and energy on making something people want (and, ideally, want to pay you for). When you do this, other founders come to you when they need advice and intros to venture capital and functional expertise.

If you’re an investor, your job is to write checks *and* add value. Here’s the paradox of investing in early stage companies today: we all know that the venture capital industry is a hits-driven business but the best companies/founders don’t need your money. Thanks to platforms like AngelList, early stage money is becoming a commodity — investors need to be differentiated. Keep your deal terms simple, move fast and answer the phone when they call.

If you’re on the government or policy side of things, your job is to make it easy for investors and founders to work in your region. You could help investors via financial incentives (see NRF, Startups Chile, etc) but the fact is that early stage money follows founders now. It’s becoming easier for founders to raise their first round of money without having to move to Silicon Valley full time but, especially as the company grows and thinks about later stage money, founders are likely to follow the money (read: they’ll move closer to the VCs). If you want to kickstart the entrepreneurial vibe in your region, start by making it appealing for founders to locate their companies there. If you do it right, they’ll want to stay where they are for the long term.

Again, it’s our collective responsibility to be a bridge to venture capital and functional expertise — as private citizens and as a country. The United States is where the internet started and, when you think about economic development and job creation, it’s where some of the most successful internet companies have flourished over the past few decades. However, the internet landscape is changing: more people are online than ever before, technology costs have dropped to an all-time low, and early stage capital is becoming a commodity.

As the internet becomes more accessible across the planet, we’re seeing that early stage internet startups can operate from anywhere: as the web gets bigger, the world gets smaller. From an immigration standpoint, it’s incredibly important that we encourage the best startup founders around the world to start their businesses here in the US — after all, they’re less likely to move here once they’ve planted their roots elsewhere and business starts booming.

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