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Gun-Shy Venture Capital

Shawn Broderick over at Myriad Missives has a great post titled The Loser’s Curse that’s definitely worth a read for anyone pitching their deal to VCs.  Shawn refers to Fred Wilson’s post of the same name.

In his post, Shawn reflects on his failure to get venture capital for his last startup, Voxx.  Voxx was similar to Wildfire, but utilized the modern communications infrastructure (read: the Internet) for its backbone.  The use of the Internet not only changed the financial model in a positive way, but also opened up the opportunity to add loads of features previously unavailable when using POTS.  In any event. Wildfire was apparently a moderate success from an investors point of view, but not a home run.

In attempting to fund Voxx, Shawn targeted Wildfire’s investors, among other applicable firms, knowing they were already familiar with the market and had been previously convinced that there was opportunity there.  They seemed like the likely suspects.  As it turns out, all of them turned him down.  He now ponders whether Fred Wilson’s view that

“. . . when you fail at something so badly that you never want to try it again even if there are other and better ways to do it that may result in a better outcome.”

may have had something to do with it.  This, of course, is referring to the idea that the VCs may have been gun-shy about getting back on the horse.

Shawn doesn’t know if Voxx had some fundamental flaws that kept it from obtaining funding, but is now considering the fact that The Loser’s Curse may have had something to do with it. 

Interesting lesson.