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Venture Capital in Detroit, Among Other Places (Video)

Roblimo posted more than 2 years ago | from the everybody-needs-some-money-sometime dept.

Businesses 36

If you have a startup idea kicking around in your head, you don't necessarily need to head for California, New York or Massachusetts to find venture capital. In today's video, Timothy Lord visits a venture capital firm called Detroit Venture Partners. (Yes, it's in Detroit.) This not an intimidating company, even though it has some big bucks and big names (including Magic Johnson) behind it. But this doesn't mean you need to rush to Detroit to fund your million-dollar idea. There are lots of local venture capital companies in the U.S. -- and chances are, wherever you are, there's one near you that's panting to invest in your can't-miss business opportunity.

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36 comments

Be careful (4, Interesting)

elrous0 (869638) | more than 2 years ago | (#39023217)

My experience is that a lot of supposed venture capital firms (particularly those that deal with economic development zones and distressed areas) are little more than scammers who live on government funding and/or ponzi-scheme style investments and use most of it to pay very high salaries to their staff. So if you're actually looking for venture capital be careful who you deal with. If their senior staff are all driving new Mercedes, while the portfolio of ventures they've funded is surprisingly slim, you might want to look elsewhere.

Not saying that is the case with the specific firm mentioned in this story. I'm just saying be careful who you deal with. The same also goes for non-profits, and anyone who wants to "pay cash for your inventions." There are plenty of reputable investors out there, but plenty of scammers too. And when you're desperate for funding for your big idea, it can be tempting to fall for the latter. Don't let your dream turn you into a mark.

Re:Be careful (5, Informative)

jpwilliams (2430348) | more than 2 years ago | (#39023315)

You're right, there are a lot of scammers out there, and that gives the real guys a bad name.

I used to work for a legit firm. Here's a few tips (totally anecdotal) in case you're interested.

1. See how fast they move
If they're trying to close the deal after one or two calls, beware. Proper firms will vet the idea, invention through several channels, as well as having lots of internal discussion before closing a deal. Even if the firm is just a few people, lots of consideration goes into each opportunity. Unlike scammers, who are wham bam thank you entrepreneurial maam.

2. What other companies are in their portfolio
Just like the parent mentioned, investigate their portfolio. Don't look for a lot of companies. Rather, look for companies that seem to have a legitimate product or service they are marketing to a known (not necessarily established) marketplace. Note: some of these companies won't have websites or huge public faces yet, that's not bad necessarily, it could just mean they are young.

3. Get a second, expert opinion
Search your network and find someone you know who's dealt with an investment banker or VC before. Tell them in vague details what you've experienced, and see if they identify any red flags.

Angels and VCs are a great way to bring an idea into reality. Don't be afraid, be careful.

Re:Be careful (0)

Anonymous Coward | more than 2 years ago | (#39023397)

Detroit, land of the $1000 house. VCs may be onto something. Where else could you get a home plus relocation expenses as a hiring bonus?

Is this even newsworthy ? (1)

Taco Cowboy (5327) | more than 2 years ago | (#39027775)

I mean, Detroit got one startup that was funded by venture capital and people think that it's so hot, that it's newsworthy

Plus, this particular startup has yet to prove it can succeed in the marketplace

One bird does not a flock made

Not until Detroit is swamped with a growing cluster of successful startups then maybe it'll become newsworthy

Re:Be careful (1)

Aladrin (926209) | more than 2 years ago | (#39023473)

I think it's worth noting that #1 could indicate you're screwing yourself, and could still be dealing with a reputable company. If you're not asking for a good enough deal, then the decision is quite a bit easier to make for the VC.

Re:Be careful (1)

iamhassi (659463) | more than 2 years ago | (#39023507)

4. If it sounds too good to be true...
If they're offering a lot for very little it's probably a scam. Recently our local "VC" claims they paid $50,000 for nothing more than a blogspot site of an idea that still says "launching summer 2011". Really? Obviously fake, a real VC doesn't give you 50k without at least a clear idea and a $10 domain.

Re:Be careful (1)

jpwilliams (2430348) | more than 2 years ago | (#39025703)

Exactly. The trouble also is that you, as the entrepreneur/inventor/owner of what's being sold, can experience some cognitive dissonance when confronted with "too goo to be true" offers. In other words, since you love your creation, a scam artist knows they can appeal to you with what seems like offers that are too good to be true, since you are trying to justify doing business with them. That's why it is so important to get an outside perspective, hopefully from an expert.

Yale professor says to avoid private equity (-1)

Anonymous Coward | more than 2 years ago | (#39023699)

Jon Stewart interviewee Jonathan Macey [thedailyshow.com] (professor at Yale) said most people should avoid private equity. Good private equity firms require huge investments - more than he can can bring to the table...

As an aside, Mr. Romney is a bad joke of a candidate - he basically represents everything that the occupiers are protesting.

What the U.S. needs is a candidate who people who work for a living can rally around, and that people who steal for a living will fear. Most people would agree that Steve Jobs worked very hard for his billions, and that there are groups on Wall Street who ought to be prosecuted.

I like certain aspects of Ron Paul's candidacy, but I wonder if he can get a message together that could break through Wall Street's blockade.

Fortunately for us there is another candidate [garyjohnson2012.com] who could black-swan the election.

Re:Be careful (0)

Anonymous Coward | more than 2 years ago | (#39023753)

Even if they want to fund your portfolio, be careful. I have seen my share of startups whose heart and soul were completely trashed by the VC guys stepping in and taking over, wresting the reins from the original inventor and people. The result usually ends up with either a failed venture (likely because the VCs rushed the release date and forced a product out in half-ass form), or the VCs shake out the original people and sell the company (and its IP) for a tidy sum.

Re:Be careful (0)

Anonymous Coward | more than 2 years ago | (#39026367)

These guys are not scammers.

Josh Linkner (one of the partners) gave a talk at Business of Software last year about creativity. He is so good he is out of the park. Very knowledgeable, very interested in creativity, so interested he has written a great book about it (Disciplined Dreaming). He set up in Detroit because he hated seeing his home town go down and no one else was interested in helping Detroit out of the hole. He's also a successful entreprenuer and accomplished jazz musician, both activities which need creativity. Thats a great combo for being a useful, non-vulture, VC.

DETROIT IS LIKE A SPIRAL DOG TURD !! (-1)

Anonymous Coward | more than 2 years ago | (#39023311)

And so it is !! So it is !!

Re:DETROIT IS LIKE A SPIRAL DOG TURD !! (-1)

Anonymous Coward | more than 2 years ago | (#39023491)

Haven't been down south much, have you? Haven't been down south much. Working in a chain gang?

Dear Slashdot editors ... (-1)

Anonymous Coward | more than 2 years ago | (#39023329)

Why is that if I have pictures disabled, every annoying post from the Slashdot staff refuses to obey that? Do you guys hard code your own submissions to basically bypass all of the user selected preferences?

PS -- your layout has been horrible for months. The CSS overlaps itself, and doesn't work on smaller screens -- what morons are doing your web work these days?

Detroit? REIT! (2)

busyqth (2566075) | more than 2 years ago | (#39023361)

In Detroit, you should be buying up all the empty lots and abandoned homes, tear down any structures, grease a few palms down at city hall to keep them off your back, and wait for global warming to make the area liveable. Then you sell high to all the people fleeing the flooding in New York and Los Angeles.

Re:Detroit? REIT! (0)

Anonymous Coward | more than 2 years ago | (#39024583)

If New York and LA are going under water Detroit will also start running into problems as the Great Lakes swell.

Re:Detroit? REIT! (1)

Anonymous Coward | more than 2 years ago | (#39025099)

If New York and LA are going under water Detroit will also start running into problems as the Great Lakes swell.

That's not where the water in the great lakes comes from! All of the great lakes are fed by rivers, rain and runoff. In general, water flows from lake superior down through the other lakes and rivers TO the ocean. Detroit is 600 feat above sea level, New york is practically at sea level. I think Detroit is safe no matter how far the oceans rise.

How can I get a job when the links are borked? (-1)

Anonymous Coward | more than 2 years ago | (#39023379)

I looked at the list of current companies and checked the hiredmyway or whatever it is. It said there were 7 jobs available, listed one without any detail of responsibilities or pay. Then there was a prev-1-next thing at the bottom that doesn't work, so I can't go to the next listing. Remember, this is a company that's supposed to help people find jobs, but their own job postings don't work?

Re:How can I get a job when the links are borked? (1)

game kid (805301) | more than 2 years ago | (#39023463)

They're smarter than they let on. Y'see, if you can't figure out that the group needs an IT professional, or how to contact them about it, you need not apply.

It's a job posting disguised as a job board. Genius!

OCP (-1)

Anonymous Coward | more than 2 years ago | (#39023737)

I have this idea for a great new company in detroit....

The companies aren't in Detroit. (1)

Animats (122034) | more than 2 years ago | (#39023919)

Most of the companies they're funding aren't in Detroit. And they mostly seem to be social media phone apps. No manufacturing, automotive, or heavy industrial startups.

(We need to get past "social media" and do something else.)

Re:The companies aren't in Detroit. (2)

Morris Thorpe (762715) | more than 2 years ago | (#39024109)

Agree.
I was interested until I saw they describe themselves as all-digital: "We invest in social media, mobile apps, software, cloud computing, e-commerce, digital advertising & media, marketing technology, and general internet businesses."
In other words, we don't want to create anything. I love Detroit but I don't think it will be reborn in this way.

Two of the companies they've funded say they are "disruptive." I'm not up to date on marketing jargon. What does that even mean?

Re:The companies aren't in Detroit. (1)

Hognoxious (631665) | more than 2 years ago | (#39030297)

Two of the companies they've funded say they are "disruptive." I'm not up to date on marketing jargon. What does that even mean?

In terms of a car analogy, the car was a disruptive technology back when horsepower literally was horse power.

There is a book that is similar... (0)

Anonymous Coward | more than 2 years ago | (#39024227)

Cory Doctorow - Makers.... Somehow this article reminds me of the book...

I wonder ... (0, Troll)

griessh (2205486) | more than 2 years ago | (#39024919)

how much they paid to get into the Top Stories?

To quote the Romney critics +5, PatRIOTic (-1)

Anonymous Coward | more than 2 years ago | (#39025215)

( whom are too many to list here)

VULture capital !

Yours In Krasnoyarsk,
Kilgore Trout, C.T.O.

Social Media, Detroit's Rebirth? (0)

Anonymous Coward | more than 2 years ago | (#39027099)

Social Media, Detroit's Rebirth?

Let's all totally commit to hoping hard enough to bring substance to one or both.

Venture Captialists (0)

Anonymous Coward | more than 2 years ago | (#39031939)

One thing I want to know is there any decent Venture Captialists in Ontario Canada

Any good Venture Captialists in Ontario Canada (0)

Anonymous Coward | more than 2 years ago | (#39032591)

Any good Venture Captialists in Ontario Canada

I wish there was good Venture capitalists (1)

kyoukhana (2427554) | more than 2 years ago | (#39032699)

I wish there was good Venture capitalists in ontario Canada to start your own company
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