Every year around this time, I take note of the similarities between the NCAA basketball tourney and the brand of Madness that we like to call Venture Capital.
Here’s what I mean. Right now (Tuesday afternoon), I’ve made my hoops selections, and the games themselves have yet to commence. My diligence was extensive, my bracket is now filled with (naïve) hope and I’m personally brimming with (even more naïve) confidence. I know deep down that correctly picking all 63 games (not including the bogus play-in game that was clearly the result of some long-ago negotiation gone horribly awry) is out of the question – yet each pick seems well-reasoned (except for some of those obscure 8-9 games) and highly defensible.
So it is as well for all new investments — and, similar to the Tournament, that euphoria sometimes lasts only until the first Board Meeting (opening tip-off?), until the first key milestone (halftime?), or until the final whistle blows on the company.
Yes, I so far have no blemishes on my 2007 hoops record, and the failures and close-calls from previous years are but faded memories. This was pretty much the kind of clean slate I faced when I switched venture firms a couple of years back, and of course reality is now starting to set in regarding various clinical delays (turnovers?), managerial departures (injuries?), and other unexpected bumps in the road.
One could argue, of course, that VCs can play a more meaningful role in the outcome of our investments then do fans trying to influence their teams’ success. Yet I often find my role as an investor to be as much a cheerleader as anything else (and sometimes trying to influence a CEO’s decision-making process seems about as effective as screaming at the television).
So here’s hoping that we’re all better investors, better company-builders, and better value-generators than we are basketball bracketeers. Now let the games begin!