This article, authored by GumGum CEO Ophir Tanz, was originally published by PandoDaily on August 28, 2013.
Institutional investment in tech entrepreneurs dates back 50 years or so and, during that period, we’ve seen the average age of funded entrepreneurs drop precipitously. The scenario today is somewhat laughable when you consider it. In a typical early stage venture capital investment, a million dollars or more is pooled from pension funds, charities, endowments and sovereign wealth funds and entrusted to a twenty-something with zero work experience, no real understanding of how to manage people or capital, no ability to command a room, garner press, or even put together decent financials…the list goes on.
Yet there is more investment in unproven entrepreneurs now than ever before. Why? What insurance does an early stage investor have to hedge obvious risk? And, furthermore, is the current value exchange leading entrepreneurs to build the best possible companies?