TLDR:
- Venture capital firms have been fixated on fast growth and forsaking profitability for the past two decades.
- It is time to challenge dogmas such as fund and market size, the dislike of hardware investments, and the need for feedback.
In his article, Fergal Mullen challenges five prevailing dogmas in venture capital that should be reconsidered:
Firstly, he contests the belief that bigger funds are always better, emphasizing that fund size should align with strategy and success metrics should be evaluated on multiple factors.
Secondly, Mullen challenges the notion that VC firms only invest in large markets and avoid niche markets, highlighting the importance of building impactful businesses within the market size.
Thirdly, he addresses the trend that VC firms do not invest in hardware, suggesting that unique opportunities and experienced founders can still make hardware investments profitable.
Additionally, Mullen discusses the concept of only chasing “winner-takes-most” scenarios, advocating for a focus on meaningful scale and fostering winner-takes-most scenarios in portfolios.
Lastly, he emphasizes the importance of giving feedback to entrepreneurs, noting that it is crucial for fostering mutual respect and continuous improvement in the industry.
Mullen’s call for a more thoughtful and individualized approach to venture capital investments challenges long-standing beliefs in the industry and highlights the need for a reassessment of key dogmas.
