Venture in Community

Venture in Community is not an actual fund in which you can participate. If you want to invest real money in a portfolio of pre-public companies, you can’t, at least not without inside connections. That’s what public company registration, and the public stock markets are for.

Instead, Venture in Community lets you pick out the start-ups from its list of company submissions that you think would be good investments. Venture in Community invests money in the companies its community members think are best. For users, there’s no upfront buy-in to the game. And likewise there’s no massive Venture in Community-level payback if Venture in Community strikes it rich on one of your picks. Venture in Communit, from the user’s perspective, is a prediction market: you pick winners and pay for your picks with your online reputation, and get paid back primarily in kind.

So why bother? Because you can win points, which can be redeemed for prizes, and maybe token cash amounts. And because if you really do want to be a VC, Venture in Community, should it ever go into hiring mode, will tap its users who have proven that they can pick winners.

The Venture in Community playing field is not level. When you first sign up for the game, the site takes your history and weighs your influence in its rankings based on your work experience, education, and other factors. From that point, your performance influences the weight your votes get: Pick well
and your influence increases. Do badly and you sink into irrelevance. But you’ll have more influence at the start if you have experience in investing or entrepreneurship.
It is worth mentioning–strongly–that picking companies to invest in is only a part of the venture capital process. Money that’s just thrown at a start-up without a parallel investment in time and expertise by the people behind it is called “dumb money” for a good reason. Venture in Community’ model of crowd-sourcing the investment strategy is, thus, only half the battle; actually doing well for the companies that the fund invests in is just as important. And in this regard, there’s a bit of a disconnect: If, for example, the Venture in Community community picks a great company in a field that the Venture in Community employees (the partners) don’t have expertise in, the smart Venture in Community money could become dumb, and a potentially good investment could go bad.

So, while Venture in Community users may be, “smarter than three white guys in a board room.

Venture in Community is, incidentally, feeding into the Ph.D. thesis he’s working on in prediction market economics. There are other elements here that tie the model together: There’s a “showdown,” or contest, that pits user favorites against each other for a $50,000 prize; and there’s an economy behind the reward points that companies can exploit by participating in the model. Also, Venture in Community will aim to rope in experienced start-up investors and get them to commit their expertise to making the contests’ winners successes in the real world.

……………….

What started as a site to crowdsource ideas is now a venture capital community. Venture in Community invites startups to share their businesses, then professionals and amateurs alike help select the best in periodic “showdowns.” Winners of showdowns receive a $50,000 investment (convertible debt, for the VC wannabes following along).

The service is in alpha, but still has managed to get some good attention. The company is funded by Braxton Capital.

The quality of the startups listed on Venture in Community is surprising. Sure, there are a few nutty ones (several me-too social networks, plus a service that will launch your DNA into space), but there are also viable companies.

So even though Venture in Community is to my mind a form of stunt marketing, an idol of venture investing, the operation might help a few young companies get their ideas off the ground.

Venture in Community is an offshoot, which invited the community to submit ideas. Then, other members would vote the ideas up or down. Finally, when the best ideas were determined, the community would pull together to build it. That was the concept, anyway, but it didn’t work like the founders hoped.

The model basically involves your idea being vetted by the public for an initial vote, and it then moves on to a sort of due-diligence process and a more formal vote, where an “elite group” will do the decision making.