“We only invest in real technology.” Nein.

“We only invest in real technology.”

I am hearing this more and more among VCs recently. I dislike it a lot. I dislike it because it falls short of the reality we live in, ignores huge opportunities (through false assumptions) and has an arrogant / elitist undertone. It implies that, somehow, if your company does not have a strong technical / engineering aspect (“real technology”) you are somehow a less worthy startup or entrepreneur.

This is of course nonsense. 

The way we view the world is that there are 3 engineering challenges:

  1. Technical engineering: you are solving a technical problem
  2. Social engineering: you are introducing a new social / human behaviour or making it easier / better to act in a social way
  3. Economic engineering: you are introducing a new economic behaviour or making it easier / better to perform economic transactions

This is very simplified but you get the picture. All 3 can individually or combined create extremely valuable companies.

That’s why I don’t care if you are a “real” technology company or not.

  • http://twitter.com/pst418 Philipp Strube (@pst418)

    Some VCs indeed say that, but then again their concept of real technology is a mobile app with a API backend.

    • http://www.berlinvc.com berlinvc

      That is a fair point – where ‘real’ technology starts is very arbitrary.

  • http://www.iceventure.de/Blog.html iceventure (@iceventure)

    Thanks for the insight. With regards to point 2 of EBs world view: Could you share your thoughts on customer education, which I recall being very much disliked in the past due to the time it consumes?

    Far more interesting to me seems the shift in sentiment, though. When more and more Vc’s start to make this kind of statement, it appears that fear of overdone investments of type 2 or 3 on your list is around in the current environment. A fear those VCs try to “cover” with the “real technology only” option. Of course from an individual point of view it leaves more investments for you 😉 so I appreciate your opinion on the general picture.

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