Venture capital and Business Model Combo

I attended a conference on Open Innovation in Ljubljana last week where I listened to some very interesting lectures. I was particularly interested in a presentation which recounted the the story of a Slovenian entrepreneur in Silicon Valley. As I have previously worked in finance and therefore know well the difficulties and dangers involved in obtaining financial resources, a story about a business model combined with venture capitalism was one that held a particular attraction for me.

It was especially interesting since I got the feeling that because an asymmetrical access to information and combining business models had been utilized, all the stakeholders didn’t benefit. Venture capital stakeholders profited from the business not in a financial sense: they kept what they had invested. However, they gained a very valuable, intangible asset: knowledge.Those who came into the business with knowledge and money, invested that knowledge but lost out on all the profits, and, in addition, were saddled with heavy debts. The stakeholders who invested the venture capital took control of the story and ended it by their rules.

This cautionary tale has strengthened my belief that it is necessary to enter into transactions with a multidisciplinary team that has initiated clearly defined rules which prevent information asymmetry in business. Since forming a multidisciplinary group of specialists can be difficult to do within a single company’s business model, this can most often be best achieved by combining different business models in collaboration with other enterprises.The rules for the participation of multidisciplinary groups can be constructed on the basis of business model canvases.