Mark Mireles blogged about whether NYC has the appropriate investors for tech companies. Here’s an excerpt and link:
But as a first-time founder trying to raise capital and achieve product-market fit, the question for me is not “Is NYC hot?” or even “Is NYC becoming a better startup hub?”so much as it is “Is NYC the best place to locate my startup?” And on that question, I’m not sure the answer is yes.
If you go through his blogs he covers multiple issues comparing the culture of the financial centre of the US and the technology centre.
So lets go down the list that Matt talks about.
People who come from financial backgrounds are the worst investors on the planet. A friend of mine was talking to investors looking to invest in a solar cell fab from scratch. For some INSANE reason, they wanted to be able to triple their investment within 2-3 years. Typically, the areas they want to invest would be the so called hot ones such as green tech, cloud computing and social media.
a) Angel Investors
You can’t find them because in financial centers. Cash is king and cash now is god. People want returns ASAP so they can invest in the next “big” thing which the market has already developed (think the ever growing amount of social sites).
b) Few Bullets
In general from what i’ve found is that the culture developed in these financial centers are incredibly unhealthy; I want results and I want them now. As most entrepreneurs are aware, the development/lead time is an incredible long process and inevitably you won’t be delivering every month.
c) Hard to create competition
At least within the Asian markets, the majority of VC’s are located in Taiwan, Hong Kong, Shanghai and Beijing. From my understanding (read guesstimate) a lot of the VC’s are tweaked to operate the same as bankers.
d) Lower Valuations
I don’t understand why the hell they want more equity within a business? In fact it’s the norm over in asia for a VC/Investor to take over 50% of shares to protect their interests. Mark Suster advocates that a VC shouldn’t take too much equity as it gives the founder less incentive to give it his/her all. It breeds the mentality that the founder is just another employee of the big VC’s company
Early bird catches the worm pretty much sums it up. You better hope your competitors aren’t running cause if they are, the few days/weeks/months you waste could be the “fun” part.
Notice how the majority successful people used to be poor? Now shift that to engineers who take fat paychecks home from giant financials. Most people want that stable income and the safe job. But the dis proportionality of the current system causes too much imbalance in the system. People who used to be key personnel become overheads. And everyone knows startups don’t need overheads.
It’s kind of like the rich kid at school who expects everything to be just the way he wants it. Well listen up buddy cause life’s tough. If these fat cats are down and out, it’s in their best interest to take the pay cut cause who else will pay them? Beggar’s can’t be choosers.
Financial’s were never meant to be investors and if they’re trying to screw you over, tell them to take a hike. We don’t need their stinking money!!!