Making Tech Headlines · Page 6
New fund managers discover experience is required to acquire experience
· New York time
Venture capitalist Olaf Sakkers has spent the past five years establishing himself as a fund manager in an environment that is especially challenging for newcomers. His experience highlights the difficulty of persuading investors to entrust capital to a manager without a long institutional history. A first-time manager faces a familiar circular problem. A track record can help attract funding, but funding can be necessary to build the record that prospective backers want to examine. The test is not simply whether a manager has ideas; it is whether investors will commit money before those ideas have produced a lengthy history under that manager's direction. The challenge matters beyond one person. New managers can bring different networks and approaches to companies seeking financing. When it becomes harder to start a fund, the range of people making decisions about young businesses may also be affected. Venture capital is associated with backing companies that promise to do something new. Its own fundraising structure can be more cautious about novelty in the person managing the money. That caution has a purpose: investors want evidence. But asking every entrant for years of experience in the exact role can leave entrants waiting outside. Sakkers's effort shows that difficult does not mean impossible. It also shows that the industry celebrating disruption has a very orderly entrance procedure.
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