Sunday, November 21, 2010

Venture or Angel Capital Isn?t the End?It?s the Means

Prashant Gulati says that TechCrunch should be banned in the Middle East. That's not because he isn?t a big fan of the site, but because he says it ?puts some na�ve and green young ones at a disadvantage?. The Dubai-based technologist and angel investor funded a startup recently. Soon after he made the investment, he learned that the majority of the money had been withdrawn from the bank. The young company founder?who previously had been unable to make ends meet?was seen driving around in a fancy red Corvette. When confronted, the founder retorted that he hadn?t started his business to live the life of a hermit; he needed to keep his girlfriend happy and enjoy life. Since he had achieved success by raising capital and was now famous, he was entitled to live the high life like all the people that he reads about?on TechCrunch. Prashant had no choice but to bear the loss and to coach the founder. I know that many Silicon Valley investors will be able to relate to Prashant?s frustration. With the attention that new investments receive and the fanfare for business-plan contests, it is easy to believe that once you?ve raised capital, you?ve made it. So fledgling entrepreneurs often spend the majority of their time developing sexy PowerPoint presentations and pitching to investors rather than building their business.


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