From TechCrunch: Where Have All The Bold VCs Gone?

There has been quite a strong reaction to Paul Graham’s essay asking why there aren’t any more Googles. Paul lays out some clear thoughts, but Eric Schonfeld takes the argument one step further with the positing of “Where have all the bold VCs gone?”

It’s real simple folks. VCs like to wield their checkbooks. When the marginal cost of corporation production goes down, things get a little tough for VCs who rely on having deep pockets. For the longest time, VCs have acted like douche bags. They act like they are the smartest people in the world. Often times this is symptomatic of some successes they have had as VCs. Ultimately, however, they all fall victim to believing that the bigger their check book, the smarter they are. When you don’t have that lever any more, all of the sudden you look pretty dumb. Their power has been removed.

Eric’s starts with the assumption that VCs were at one time bold. They aren’t. In recent memory, they have not been. The winners of this period of reduced capital requirements are going to be VCs like Graham himself (and Josh Kopelman), who are being innovative about creating new engines of startup creation. Taken one logical step further, VCs need to start thinking about being deal creators, and not deal sourcers. What happens when each GP in a fund is required not to fund a deal that came in off the street, but rather to start one business a year? When your money is worth less because of abundance and reduced capital requirements, what do you have left? Not much. Unless you become an entrepreneur and start creating some proprietary deal flow.