Achieving success through social capital
According to an experiment conducted by University of Virginia, now known as the Oracle of Bacon
at Virginia, actor Kevin Bacon is at the "Center of the Universe."
has worked with various actors and is connected to pretty much, the
entire acting universe with the shortest links or "degrees of
separation." Similarly, Sand Hill Road
in California is considered to be the center of the venture capital universe.
brightest minds of capital work closely with entrepreneurs &
technology to create intrinsic value, build anchor companies leading to
strong financial returns. To build Michigan’s venture capital
infrastructure, Venture Michigan Fund, a Fund of Funds with
approximately $100 million was launched by the State of Michigan in
Last week, fund manager Credit
Suisse picked its first three venture funds in which substantial amount
of capital, ranging from $5 million to $15 million, would be invested.
These funds have a mandate to invest in Michigan companies, which may
foster collaboration and trust within the financing industry.
In a well researched white paper
Steve Bird, of Focus Ventures analyzed returns from more than 8,000
venture financings from 1980-2003. Steve argues that “fortunes are
built on bonds of trust and reinforced by repeated success”. If you
analyze the investments made by Michigan venture capitalists over the
past five years, you’ll notice an interesting trend: very few companies
have raised capital from two or more Michigan venture capitalists.
While most venture capitalists offices are within a short driving (or
walking) distance, investments did not reflect "bonds of trust." How do
you build bonds of trust and camaraderie in a highly competitive
business where each one is independent, opinionated and trying to "get
more"? My friend, Marc Weiser, founder of Ann Arbor-based RPM Ventures
points out that venture capitalists in Colorado meet regularly at pubs
or bowling alleys to just enjoy the downtime & catch up. Maybe, I
am being naïve but I believe that Venture Michigan Fund, by virtue of
its in-state mandate, may foster collaboration amongst the financing
industry. That should be a reason for cheer. In my opinion, Michigan
need not aspire to become another Silicon Valley but rather aspire to
replicate the foundation of trust and partnerships that build Sand Hill
Road. Economic success and growth is a natural by-product in a