[p2p-research] big does not necessarily innovate: the current VC model is broken

[J. Andrew Rogers]

On Fri, Nov 6, 2009 at 1:00 PM, Michel Bauwens <michelsub2004 at gmail.com> wrote:
>
> This goes against the argument that 'big concentrations of capital' are
> necessarily more innovative


Not really. Arguably this is only true within the context of typical
venture capital structures rather than generally. This has been
well-analyzed in many places.

It is unclear what 'big concentrations of capital' actually means
beyond there being enough concentrated capital to take very big risks.
 Some ventures only require millions (or less), others require
hundreds of millions *at a minimum*. There is no one-size-fits-all for
the cost of innovation, so it is useful to have concentrations of
capital available for every investment that can return innovative
value.

What you do not want is a class of innovations that are simply
impossible to develop because the required 'big concentrations of
capital' do not exist.  Such a class of innovations will always exist,
but it makes sense to minimize that where possible.


-- 
J. Andrew Rogers
realityminer.blogspot.com