Mike has a nice post up about the "new kids" in the VC scene. I'm seeing the same thing but do have one very important point to add to what he wrote. Take a look at the following quote from his post:
The fact that Teli left the venerable DHTV for what is effectively a startup VC speaks volumes. As well as Amadeus, other VCs that have seen people depart and not be replaced include Eden Ventures – which shed two junior associates last year – and Balderton Capital. Partner Dharmash Mistry recently left Balderton to pursue his own investing. These may not add up to a trend away from the old guard of VCs, but it is certainly interesting to note.
Mike writes this is not a trend but I'd say it is. It's also going to get worse since the old guard will have a hard time keeping it's younger players. I'm not talking about the fresh graduates from Insead, WHU or EBS. They'll keep coming in droves and will fill the junior positions. The folks I'm talking about are the more senior players who have at least three to five years under their belt in the VC scene, may have already done a start-up or two and probably have spent time working in the US or are from there.
Why are these young guns leaving the old guard? Well here's my theory:
1. The Old Guard of VC's mostly made their money in the late 90's and a nice chunk at that. They got the getting while the getting was good. As is the case in Europe, once you make your money, you relax and take life a lot easier than the folks in the US scene. (Both entrepreneurs and VC's in this case.) Why actually work when you can let others do it for you? Why also give up any of your power (or carry) when you don't have to? You want to work "for" these guys? Fortunately there's only a handful of these funds left and they'll disappear into obscurity via this trend.
2. A lot of the older players were entrepreneurs in the hardware, telco or infrastructure space. That's not where the puck is going and the younger folks know this.
3. The younger players bounce between geographies, i.e. Valley, NY, maybe Asia and some now even in South America. The old guys don't travel much nor feel inclined to network. Hell, most US VC's and entrepreneurs don't even have a clue who they are, nor care. Folks like Sitar (and ten more I could name off the top of my head) are actually known entities in the US. See Dave McClure's comment on Mike's post.
4. The new guard wants to be operational. I am sure there are multiple motivations for this but this new round of VC's in Europe is willing to again get their hands dirty and actually talk about product details and want to understand the underlying tech. A lot of this may stem from the fact that a lot of these folks may have been at a start-up but "fell" into VC a bit too early. Venture capital is a game where you bring your experience to the table. 40 is a good age to start and better than 25. If you don't have enough experience, you're never going to differentiate yourself. These younger players know that they have to continue learning and I'd wager they're throwing themselves in the deep end to get their operational skills jump-started.
The last point is the reason I started Liquid Labs with Michael. We both had been in the VC space but wanted to actually work directly on start-ups and build things again. I felt like my skillset had become stale in comparison to the new start-ups I was seeing. The way people work has also changed a boatload since the late 90's.
Hence, the trend of younger VC's to return to start-ups or to "Start-Up VC'S" is a good thing and will deliver a nice wave of funds in the EU in five years time. It'll be painful to watch the old guard wither but have no pity. They all have plenty stashed away on the personal front and the community will benefit from it immensely. Further, innovation only happens when you break things and it's time people started breaking more in Europe.