Venture Capitalists main job is not to protect paper bills/ paper money. However, for paper bills to multiply, venture capitalists need to protect the mind-set, with which innovation can live and prosper. This is why venture capitalists ask for high management fees and success fees from their investors. The art of venture capital is in living and practicing this mind-set.
Billion-dollar idea is the focus of a venture capitalist. Disruptive technologies, paradigm shift, finding the black swan is what venture capitalists need to think, live and die for. The rest is in the hands of entrepreneurs and the team.
In the emerging markets - including Europe- where when entrepreneurs choose the path to innovation, technology and start-up life - the world is quite lonely. In a path to creating "billion-dollar" companies, the tools in emerging markets - such as law and accounting system - as well as people around (family, friends, teammates), aren't positioned for support, but rather create barriers when there is a conflict. And there is always a conflict when you are moving and growing and especially disrupting.
I have come to realize more and more that there is a "billion-dollar" mind-set.
Billion-dollar mind-set represents:
-- no entitlement, pure meritocracy,
-- courage and fearlessness,
-- honesty and self-esteem,
-- discipline and asceticism,
-- investing in a long term vision and believing that long term vision always wins,
-- lust for meaning and mission,
Did I say courage and fearlessness? I want to say it twice. It is crucial to remind the value of "Mission" and "Courage" together.
The dilemma of a venture capitalist in an emerging market is that it is very schizophrenic to protect the mindset without tools in place. The tools in place need to be in accounting, law, business society rules, etc.
For example, according to accounting and written law in Europe and most of emerging markets, "value" is only defined by hard assets such as real estate, machines, doors and chairs. In this definition, "value" is very well defined and easy to part or share.
However, when the value is in soft assets, especially when it is startup value, things get complicated. If soft value isn't turned into hard assets and "paper money" yet, then what does law protect? How can it be written in the books? When the accountant writes it in the books, can she defend it? Can a lawyer defend the company and company's soft assets to anybody who is trying to kill it? Can any company lawyer in Turkey say " It is all about the entrepreneurs. It is all about the company"?
If the company lawyers, company accountants doesn't understand the value, then who protects the company and the soft value in the long term? Just the entrepreneur? How can she defend it if the lawyer doesn't believe her? Quite often, so-called venture capitalists in the emerging markets are too busy protecting themselves rather than investments.
If there is no one else in the business environment to think, live and protect the mind-set then how can there be any venture capital, innovation and wealth creation? It is an uphill battle that we are fighting. We are not finished yet, in fact we are just starting as we have just started understanding.