Earlier today, I was looking forward to a panel discussion dubbed “20 Tough Questions for VCs” at the TechCrunch 50 conference in San Francisco. It should have been called “20 Questions Rehashed from 20 Other VC Panels.” I’m not sure who came up with the questions — TechCrunch readers or TechCrunch’s staff — but they were pretty bad.
Tough Question No. 1 was: How does the IPO drought impact your investments, and why should it? “The second part of your question answers the first part,” said panelist Ross Levinsohn, a managing director at LA-based Velocity Interactive Group. “[The drought] doesn’t [impact our invesments]. The market has cycles, and we’ll be out of this one in a couple of years.”
Sumant Mandal, a managing director at Clearstone Venture Partners in LA, was thankfully more frank, saying that the market has impacted the way that VCs invest, whether or not they admit it. Specifically, said Mandal, “investors are either retreating to early-stage startups or [late-stage] companies with a lot of momentum,” while the companies in the middle are essentially getting screwed.
Other somewhat tired questions for the panelists included whether the balance of power has shifted from VCs to entrepreneurs, whether entrepreneurs even need VC these days, and whether VCs think that innovation is dying in Silicon Valley. TechCrunch could have done much better.
To be fair, there were interesting moments. Audience member Adeo Ressi, founder of TheFunded, posed one of freshest questions, asking how VCs are keeping confidential information from leaking — a perennial concern for entrepreneurs. Several VC panelists quickly began denying that sensitive disclosures ever happens, but another panelist, serial entrepreneur Mark Pincus, interrupted them, saying: “Let’s all be honest here. It happens every day. It’s death by a thousand cuts.” (I would have loved a follow-up discussion, pointing out a company or two that has been hamstrung by leaked, confidential information.)
Pincus was generally one of the most entertaining parts of the presentation. Part of that owes to the role he played on the panel — the part of entrepreneur advocate, which he carried out by telling the VCs the various things they do wrong in negotiations with company founders. (For example, Pincus lobbied for less deliberating among partners over whether or not to do a deal). Since developed since launching Zynga, a casual gaming company that recently raised a whopping $29 million B round led by Kleiner Perkins, Pincus has also developed a penchant for gambling metaphors. At numerous turns, he likened venture capital to a hand of Texas Hold ‘Em, one of Zynga’s most popular games; he also asked his fellow panelists if they were “all-in” on more than one occasion.