Thinking About Thinking

Are VCs Lemmings?

Posted in Venture Capital by larrycheng on October 28, 2009

Many in the entrepreneurial ecosystem (VCs included) have used the phrase, “VCs are all lemmings.”  Is this true?  Is it not?  Before answering that question, let us take a look at the lemming migration across the Norwegian coast.  How can you compare a VC to a lemming, without detailed knowledge of lemming migratory patterns?  Here’s a transcript from a Brittanica.com video – best to start the video at 1:14 while reading the transcript [with VC translation - tongue firmly planted in cheek]:

“The second thing lemmings [VCs] do is reproduce.  As more and more individuals [VCs] are born, the food and water supply [good deals] begins to diminish.  Every three to four years, the populations in some localities grow to great densities [Silicon Valley, India, China].  In response to this overcrowding, lemmings exhibit a very specialized behavior [reinvention].  Individuals begin to migrate away from the centers of dense population [to other centers of dense population - cleantech, web 2.0, etc.].  They group together and move in detectable waves across the countryside [cleantech forums, web 2.0 forums, etc.].  Whatever barriers block their passage [absence of business models], they tend to crowd in increasing numbers until a sort of panic reaction drives them over the obstacles [capital market ponzi schemes].  The migration impulse [fear their track record will be exposed] affects each individual driving them to keep moving [doing new deals].  If a stream or river interrupts their path [no exit market], they swim across [bridge financings].  Many die during migration – perishing by predation, starvation or accident.  Occasionally, some reach the ocean [a new firm] and plunge in [break out a new checkbook].  Once again, they begin swimming [doing new deals].  They act under the same impulse [trying to get a winner] that forces them to cross smaller bodies of water.  Swimming until exhausted, all of them drown.  Through this migration and mass drowning, the number of lemmings is checked.  Scientists do not yet completely understand how this behavior has continued over the centuries when so many of the emigrating lemmings die.”

All in good fun :).

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