Over the past year, I have been more and more plugged in with the startup and VC/Angel activity in greater Boston. There is always an intersection with talk about innovation. So, the question hit me… are the investors innovative? This post is more of a series of questions than answers, although, perhaps some conclusions can be made.
What does innovative investing mean? Should investing be innovative? Is it a double standard for investors to want to invest in innovation without themselves being innovative? Or are investing and innovating opposite characteristics that complement each other?
Almost every day, when I walk into a room, I talk with people who are unemployed, under-employed or yearning to do something other than what they are currently doing. Many of these people still have a spark in their eye and a bounce in their step, and they talk of ideas. Somehow, they do not fit the right profile for companies to hire them, give them another project or invest in their ideas. Some people are good at creating a buzz, and others are too busy doing things to create the buzz. Some of the ideas do not seem to shout out, “I’m a clear winner!” Bill Warner, founder of Avid Technology, talks of how his company Wildfire did not attract the attention of the venture capitalists until he repackaged it, but the repackaging was not what he really wanted and not what the product really needed. In fact, it became a product that should have remained a service.
With the economy struggling and many great people struggling to work or develop ideas, my instincts are to gather everyone together and make a great company. For me, innovation in investing is when an investor takes a little different type of risk, which is to put money into startups that do not shout “I’m a winner!” but that have people working on them who are winners. For creative, thinking people, the current idea is just one of a series innovative experiments. Given the right environment and support and catalysts, these innovators have as much chance of developing something successful as someone who seems to have already hit on a successful idea. Everyone’s trajectory is different, so everyone who experiments will find success at a different time. By supporting these innovators who do not yet have the next great idea, the investors have a great chance of helping them actually find the next great idea, because this is an investment in the innovative process rather than in a specific idea. Isn’t there less risk in investing in innovation than in an idea?
I suppose incubators are meant to fuel innovation and invest accordingly. Still, I get the feeling that there are so many great entrepreneurs around me that are not on the radar of the VC and Angel investors. How do we stimulate more innovative investing, and should we?