It’s Not the People You Know. It’s Where you Are? at Catch a Gideon

October 26th, 2006 by digerati

Let me start by saying I love the new New York Times Reader. It’s a downloadable program that automatically downloads the Times when you open it. But, the cool thing is the text rendering is amazing, way less eye strain from reading on the computer. I’m hoping to either hack it or find a hack that does the same with other papers (since I didn’t read the Times regularly before they came out with the reader…).

Anyway, they have an article from the 22nd that discusses the “20-minute rule” concerning funding in Silicon Valley. We’ve all heard the adage “it’s not what you know, it’s who you know.” Now it’s apparently not even who you know, it’s where you are when it comes to getting funding from VC firms these days.

Craig Johnson, managing director of Concept2Company Ventures, a venture capital firm in Palo Alto, Calif., who has 30 years of experience in early-stage financings, said he knew many venture capitalists who adhered to this doctrine: if a start-up company seeking venture capital is not within a 20-minute drive of the venture firm’s offices, it will not be funded.

Are they that lazy?

Mr. Johnson explained that close proximity permits the investor to provide in-person guidance; initially, that may entail many meetings each week before investor and entrepreneur come to know each other well enough to rely mostly on the phone for updates. Those initial interactions are fateful. “Starting a company is like launching a rocket,” Mr. Johnson said. “If you’re a tenth of a degree off at launch, you may be 1,000 miles off downrange.”

Ok, so it makes some sense. But i wonder if it is really a matter of laziness or if the VC companies don’t want their budding new executives taking valuable time to travel to the VC offices. Maybe it just paves the way for small VCs to fill in the gaps outside the 20 minute radius of Silicon Valley.