Killing the Entrepreneur

Why Pittsburgh lags behind: Local entrepreneurs get advised to stay away from "risk-averse" investors, like venture capitalists.

I used to represent VCs. I know first-hand that they can suck the blood out of a vampire, and I know that they don't have much interest in making sure that the person who came up with the idea and nurtured it for years on a shoestring gets a "fair" cut of the proceeds when the public offering ship comes in.

But in a lot of cases -- and real entrepreneurs know this -- the venture community is the very best source of both money and much-needed managerial expertise. Most academics-with-an-idea don't have a clue about running a real company. Friends and family money will only take you so far. Banks won't be much help. Neither one will take a spot on your board and force you to make hard but necessary decisions. For most startups, the choice is internal growth that leads to death-by-a-thousand-cuts, or a venture deal that cuts out the founders prematurely but gets the idea, and the company, into a real marketplace. You want growth? There are no guarantees. There is only risk. Pittsburgh needs to make the venture community a welcome and visible part of the business culture.

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Pittsblog 2.0 is written by Mike Madison, a law professor at the University of Pittsburgh. Send email to michael.j.madison[at]gmail.com. Mike also blogs at Madisonian.net, on law and technology. Chris Briem of Null Space drops by from time to time.

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Pittsblog 2.0 has a motto: "It's steel good in Pittsburgh." Say it aloud, with a Pittsburgh accent.

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