VC Cliché of the Week

As I prepare to head down to DC for a board meeting this morning, I am reminded of one of the classic VC Cliches.

Lemons ripen early, pearls take longer

I am on the baord of five companies from the Flatiron portfolio.  We invested in four of them in 1999 and one of them in 2000.  Most of these companies were started by their founders in 1997, 1998, and 1999.  So they are five to six years in our portfolio now and at least six to seven years old this year.

And guess what?  They are all doing great.

That's the thing with the venture capital business.  The bad deals reveal themselves to you early and you have to deal with the fact you made a bad investment and figure out how best to get it out of your portfolio, by either selling it, merging it into something else, or shutting it down.

The good deals take years to develop.  If you have the patience, you are almost always rewarded. My five companies are rewarding me with great years in '04 and what looks to be even better years in '05.

Comments

[jackson]

Along those lines, I guess I'm quite the pearl myself. Nearing forty and just beginning to see the dividends. Altough I suppose I came off as a lemon for many years.

[Karen E]

Me, too, quite the pearl as I near a multiple of 5.

Maybe to celebrate your pearlescent portfolio successes, Fred, you could buy all your loyal readers a few dollars on iTunes so we could keep up with your fast and furious music recommendations. I'm gettin' Sondre tomorrow!

K.

[S]

Yeah, but telling the difference between a lemon and a pearl is not always as obvious in the beggining. It seems like you are good at telling the difference. How do you do it?

[ATP]

Lemon and Pearls are difficult to distinguish early, but well said that lemon gets right in your eye sooner than, and if the difficult aspect is getting value out of this.

I love reading your blogs! Keep the show going! Demo bloging was intresting.