Performancing Metrics

A Series of Small Things

Random Thoughts on Building Venture-Backed Companies in the Midwest

A sign of the times

7.8.11 by Dov

I don’t know how many more times this can be repeated (one, two, …, a million and one), but apparently, the VC industry is in the midst of a consolidation.  Probably healthy for the industry (and our investors), but less so for entrepreneurs due to the whole supply and demand thing.  Mark Suster provides a nice overview of the situation in a series of posts, making the astute point that this contraction coincides with dramatically reduced costs to create a new business.  As a result, you have many more companies being started and making real traction using friends, family, and angel investor capital.  But when those companies get to the point where they really need venture capital to continue their growth trajectory, they’re hitting a “brick wall“.

Well, if he thinks that it’s getting tough generally, he should check out the Midwest.  Here, in addition to the industry-wide factors that he cites, we have the added push from local and state government programs encouraging more angel investment than ever.  And on the flip side, our VC base has gone from small to, well, really small.

At Allos, we like to think we’re doing our part to support the entrepreneurs (and our investors, of course – it’s a win-win), and so were pleased to see our initials reflected in his telling graph of the state of the industry (OK – we added the green line, but that was just in case you hadn’t had your coffee yet):

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