How to Make VCs Happy

Paul Deninger, Vice Chairman, Jeffries & Company gave a great talk at the AlwaysOn: Stanford Summit, with the dramatic title, Why Aren’t VCs Happy?  It starts out a bit heavy, suggesting that VCs should be unhappy in the currently shaky financial market, but ends with a constructive point.  The key to future happiness will be to resist the temptation to sell companies prematurely and make the effort to prepare companies for the public markets.  He asks what if Cisco had sold itself to AT&T instead if going public at roughly a $250 million market cap.  He notes that the public markets are now receptive to growth companies with a market capitalization under $500 million, counter to the post bubble myth.  I agree that the key to venture will be to patiently strive to create growth companies and be prepared to undertake the costs and hassles of the public market in exchange for the potentially significant rewards.