There were a number of signs from my Higher Power that VC was my calling. Shortly after I moved from California to Kansas in 2000, I unthinkingly dropped the term "VC" into a conversion with a finance professor who said "What?" Clearly, I had a comparative advantage.
Then three doctoral students - all three of whom were absolute pleasures to work with - chose to write on small business finance or venture capital, despite the fact that I knew nothing, nada y nada, about small business finance or venture capital (though I did know what VC meant). Students were leading the professor on an important dimension: what to study.
Mid-decade, representatives of the Kauffman Foundation came to the University of Kansas and expressed an interest funding an entity - a center or something like that - that would support top-notch research on entrepreneurship. My colleague Joshua Rosenbloom was there. From the KU Department of Economics, he has worked on the economics of innovation and thus was actually credentialed in the topic. We decided we could play the role of economic statesmen -- the mediators between the Kauffman Foundation's targeted support of research entrepreneurship, on the one hand, and local KU talent that could illuminate the topic, on the other.
The resulting entity, CREA or Center for Research for Economic Activity, received funding from the Kauffman Foundation and did in fact support top-notch research by Donna Ginther from KU's economics department and Vladimir Ivanov then at KU's finance group in the business school. We also hosted outside speakers like Scott Stern, now at MIT, and Toby Stuart, now at Berkeley.
I confess to a devilish "Nixon-goes-to-China" pleasure in having hosted Stuart. I am an economist by training, often pigeonholed. Stuart got his degree in sociology, he has served as an editor of the American Journal of Sociology, and his official bio has words like "organization" and "strategy," mushy girly stuff in the view of so many economists and finance professors. He is one very smart dude interested in stuff that matters, and I am glad I was able to introduce him to my colleagues at KU.
At about the same time, my son studied and then started working in computer science, the field par excellence in which entrepreneurship is not just endemic, but where it matters and has changed our lives forever in big, big ways. If I was interested in my son's work, and I was, I had to be interested in the world of start-ups, entrepreneurship and "liquidity events". One of the signs that you are aging gracefully is that you can learn from young people and share their enthusiasms and interests.
Some of the irony is not lost on me. My son has worked at three corporations, all publicly traded. I have worked at none, always at universities and government supported think tanks. But I teach finance.
Then, the very last and decisive Sign from Above that venture capital was my calling was a request to teach Entrepreneurial Finance, a course I had never taught. Yes, yes, yes, a thousand times yes. I will do it.
My line on this has been: Lloyd Blankfein famously said he was "doing God's work" at Goldman Sachs. No, no, no. Helping an engineer start his own business, that's God's work.
Well, I haven't taught the course yet, but it's been fun getting ready. Details on what I am learning will follow. For now, I like this gig for several reasons.
1) The practitioners want to talk to you and help. This includes angel investors, venture capitalists, entrepreneurs, or "eco devo" (economic development) types. I attribute some of this to the strong influence of the computer scientists, who for the most part like openness. Another reason for openness comes from the collaborative, networking nature of the early and middle stages of a start up's life. In any event, the relatively free flow of information has been a welcome change from other parts of finance, where important stuff is going on, but nobody will talk to you. (Try, just try to find out what what goes on at Renaissance Technologies, one of the largest and most successful quant hedge funds.) One more bit of evidence: when I ran into a KU graduate and angel investor in California, he invited me to spend the better part of a day with him in Sunnyvale going over the dynamics of the industry and the economics of some of his current deals.
2) The people who write on venture capital are great. You discover Paul Graham. (Quick, check out paulgraham.com if you have never seen it). You find books like the recently published Venture Deals: Be Smarter than Your Lawyer and Venture Capitalist, by Brad Feld and Jason Mendelson, both with the Foundry Group. As I read the book, I had these admiring and envious thoughts: These guys really know their stuff. And why don't professors write like this?
3) Actual venture capital practice routinely integrates the finance with the underlying economics and technology. There are no silos. It's a generalist's dream-come-true. To illustrate, I went to two "pitch events" in San Francisco at which mostly twenty-something entrepreneurs made tightly scripted pitches to a panel of venture capitalists (including a Zynga founder) and then fielded questions from the panel. It is also true later, when serious VC money needs to be raised. Unlike other areas of finance, the connection between the financing and what the firm does is pretty tight.
My journey continues. I'll welcome tips on books, websites, events, and whatever else is relevant for this topic. Email: bittlingmayer@ku.edu.
George
