Quote from cashmoney69:
I may be wrong about this, but people in the VC business usually have many years behind them in some kind of specialized field, like software engineering. He probably isn't just some average joe.
Yes you are wrong on it.
In reality, it's mostly about relationships. If you know rich people and have a good rapport with them, it is very easy to raise money. Because it is really all about trust (or the illusion of it). Noone cares for your track record, audited or not, if they simply do not like you. I remember someone else posted an extensive explanation behind the process, the biggest issue was the backers meeting you and your reputation in the social circle. It's not what you know but who you know. After all, historical performance does not at all guarantee similiar future results.
It's no different from the stock broker industry. Those who come from families who rubs elbows with the rich, can easily get those clients simply because they know them.
The hard route is still doable, but those with money are a lot more cautious and diligent with those they do not know. They got burned from the tech bubble and those wounds still hurt. Does not mean they do not still invest in idiotic concepts that have no chance in reality, but just because you may have a great idea/concept/strategy does not mean they will just hand over the cash.
I think it's safe to say that at least half of the VC business are founded by former I-Bankers and I-Bank traders. These guys come in with relationships in place, often their previous clients kinda motivate them to start a VC business.
IMHO, someone who spends a lot of time in a social circle of rich people has a much better chance of getting VC than a very experienced guy from a specialized field. I mean, this why CEOs can run down a company to the ground, get a multimillion dollar severance package and then go get a CEO position at another company the next month.
