Here is an interesting article on the Wall Street Journal about a new pattern in VC investing called “Pre-emptive financing.”(hey WSJ, when did you finally get smart and open up your walled garden??)
In English, the definition of pre-emptive financing would be “get our money into the company before a fight breaks out over this ridiculous little company and sends the valuation into the upper atmosphere.”
We may not have the public market exit route of the dot-com era to count on, but it seems that this has not dampened the venture capitalists’ paranoia about being the least cool kid on the block.
I hear this phrase all the time: “I missed out on (some thing from 5 years ago.) I’m sure not missing out on (some current fad) this time around.”
Heck, *I* have uttered the same words! (And still do!)
There is some sort of psychological fear that seems to be rooted in that game of Musical Chairs we all played as a kid. Everybody circles the chairs, the music is playing, the players are all eyeing each other warily and moving in short bursts, from chair to chair, jockeying for position. Then WHAM. It’s time to invest in ….. blogs!! The pushing and shoving ensues and one unlucky soul finds himself standing up like a complete and total loser, having not been able to find a chair to sit on.
But now, with pre-emptive financing, you can sneak into the room before the game begins, find the comfiest chair and plop yourself down in that chair and just wait for the rest of the kids to discover that there’s a game of Musical Chairs on.
In a time such as this where the capital is prevalent and the ideas and good entrepreneurs are in relatively short supply, this all makes good sense.
Entrepreneurs of the world….the time to go find capital is now.