The Quantum Graph

Tag: venture capital

The Real Risk Takers… Bureaucrats?

Doing business with the Illuminati; logo of the now-defunct Information Awareness Office (IAO)

Doing business with the Illuminati — IAO logo

According to wikipedia, modern venture capital goes back to the post-World War 2 era when weary American soldiers needed support to help their business ideas take flight. This was a key factor in the 1950s US boom and economic dominance which lasted until recently.

Of course, venture capital goes way back in time. Columbus famously lobbied the Spanish crown for years before they gave in and funded his vision to establish a trade route with India by sailing West, at the risk of falling off the face of the Earth. His voyage provided hard evidence for our planet’s roundness, and also happened to introduce Europeans, Africans and eventually Asians to the Americas on a large scale. For better or worse, venture capital is generally a full half of the equation in any successful discovery or invention.

Every venture has associated risk. The more developed an endeavor is, the less risky. I.e., a company which is making money is better proven than a company which hasn’t yet seen a penny of revenue. Of course, higher risk may imply higher reward. If you invested $10,000 in Google when it was founded in late 1998, you would see a greater return on investment than if you invested the same amount in Google yesterday.

Venture capital geared for unproven businesses is called early stage or seed stage capital. Investors at this stage mitigate their risk by looking for things such as impressive teams and working prototypes. What if a team doesn’t have a working prototype just yet? Institutional venture capital is then a highly unlikely source of funding. Angel (individual) investors are one option, the other is government. If your idea is truly awesome but unproven, there are a number of big-spending governments which will give you money to realize your vision.

Organizations which invest at this stage include Defence Research & Development Canada (DRDC), the United States’ Intelligence Advanced Research Projects Activity (IARPA), and Britain’s Defence Science and Technology. All these agencies are concerned with having a leg up on their “adversaries”, and all are interested in spending large sums on high-risk, high-reward research projects. According to IARPA,

Failure is completely acceptable as long as…

  • It is not due to failure to maintain technical and programmatic integrity.
  • Results are fully documented.”

The British Ministry of Defence accepts funding proposals for systems which are at a Technology Readiness Level (TRL) of 3-5. This means the tech is at worst still being proven feasible, and at best is just mature enough to be demonstrated. Despite some initial reservations one might have about working directly with the military industrial complex, the solicitation/RFP process is open. Further, 21st century Western governments don’t have the gall/cojones/chutzpah to ask for exclusive rights to a piece of tech. In other words, they will fund open source projects if it means they can avoid being surprised by the unexpected arrival of novel, disruptive technology.

If you are in the midst of building something “not just evolutionary, but revolutionary”, and are being turned downed by risk-averse investors, then look for government defense contract money. They’re blowing so much cash on BS these days, they might as well spend some of that on a good cause like your idea.


An Open Note To “Disruptive” Venture Capitalists

Over the last year I’ve had correspondence with ~20 investors from around our little planet; in person, over the phone/skype and via email. Each one is unique and beautiful like a snowflake, and like a snowflake each one melts when exposed to heat. Some of the investors I’ve spoken with are ‘mid’ and ‘late stage’, meaning they put money into companies that have already generated some revenue. Others are ‘seed’ and ‘early stage’ investors; these are the ones I have a bone to pick with as they are supposedly the most open to risk. — (In fairness, criticism and rejection are among the most valuable things an entrepreneur can hope for)

Venture capitalists (VCs) will tell you they require the following for them to consider investment: 1) a large and preferably untapped market to address, 2) a diverse team of dedicated, tenacious and experienced people, 3) some kind of traction such as strong relationships with potential customers, and 4) a product/service that is cool and does something original.

Yeah? Then put your money where your mouth is, people !!!


June 2013 editor’s note; VCs are wise.

Dear Sir: Plea$e give us ¥our Mon€y

Yesterday I tracked down mining tycoon Rob McEwen. He infamously turned Goldcorp, a relatively small Canadian gold mining company into the world’s second largest — from $50 million to $10 billion market cap. Rob spoke at a Scotiabank mining conference at the King Edward hotel in Toronto. After unsuccessfully trying to haggle my way into the non-public conference ballroom, I sat in a stately lobby with fat Greek columns next to a giant Christmas tree and waited for him to come out. Recognizing his face from a Bloomberg interview, I noticed and followed him upstairs to the mezzanine. I approached Mr. McEwen at the snack table and got my introduction in before the nice gatekeeper lady who denied me earlier came to shoo me away. Luckily he’s a cool guy; we went back down to the lobby and sat near the pine tree to discuss a mixture of medicine and technology.

McEwen is familiar with what can come of good data and good software. In 2006 Canadian Business magazine named him the ‘Most Innovative CEO’. He’s also an investor, and as Noo Corp is seeking investment, I thought it wise to pitch him.

Athabasca tar sands, Alberta

Harvesting natural resources is probably an older profession than prostitution. It’s the backbone of any given civilization – famous or forgotten. When supplies collapse, so do empires. In recent times, as the Earth’s population has exploded, demand for things like copper or cadmium has increased dramatically. As a result, natural resource extraction has gained a well-deserved reputation as being downright dirty [July ’13 edit: it is truly ugly]. Yet with companies like Planetary Resources looking to the heavens as the next great frontier for the elements we use, it seems fair to say that our appetite for raw stuff is insatiable.

As a side note, before the San Francisco / Bay Area became Silicon Valley, it was the site of a great mining rush, as pointed out in this fascinating talk (thanks Pete).

Back to the story, McEwen’s insight was that the mining industry is mostly aloof regarding its use of data. This was a light bulb moment: noospheer has finally found its niche. Unifying the entirety of a given mining corporation’s data — both geospatial and logistical — implies an increase in efficiency. Overlaying this with open data on a given parcel of land from the wider network implies an increase in awareness. Efficiency and awareness in this context means less environmental impact. By integrating multiple data fields gathered from increasingly non-invasive exploration technologies, we can get more out of this planet while scarring her surface less. In the future, we should one day be able to teleport gold right from within the Earth’s crust.

Noospheer’s vertical is the natural resource mining industry as its a mess, and its data is too. Clean up the data, clean up the world. We’ve now met and spoken with numerous mining software companies for feedback, raw test data for piloting the system, and agreement to run the beta once ready.

Was Noo Corp successful with the ask? I’ll let you know.   ~Jordan

[July ’13: not yet]

Why should your firm grant Noo Corp with venture capital?

This August, David Sacks made a post on Facebook which caused some stir in the venture capital community.

I think silicon valley as we know it may be coming to an end. In order to create a successful new company, you have to find an idea that (1) has escaped the attention of major Internet companies, which are better run than ever before; (2) is capable of being launched and proven out for ~$5M, the typical seed plus series A investment; and (3) is protectable from the onslaught of those big companies once they figure out what you’re onto. How many ideas like that are left?

This blog post addresses Sacks’ three points:

  1. The vast majority of tech companies are focused on creating cool new products – ‘killer apps’. No issue there, but the problem which has resulted is that there is, (a) a deluge of apps/services on the web that don’t communicate with one another; and (b) there is a massive disarray of data generated by these technologies. Noospheer recognizes that in order for the web to make its next leap of usability, data from disparate sources must be fully integrated and apps should tie into one another far more easily. We address the deep challenges associated with these problems from an entirely new angle: classical-quantum computing (performing quantum operations by efficiently utilizing commodity hardware). Our project argues that this is an approach which has ‘escaped the attention of major Internet companies’. — As an additional point, the revenue generation potential associated with a data integration platform is enormous. As yet, there is no eBay of data. See the model.
  2. Our ask is $1.4m CAD. Including the seed we raised previously, we can prove out the design for less than a third of Sacks’ magic number.
  3. Being built on top of battle-tested open source parts, the software is fully protected by the open source paradigm. For an argument in favor of open source from a business perspective, see this.

The search for venture capital has taken this project around the world — North America, Europe and Asia. As yet, we have met resistance and continually refine our tactics. We seek investor(s) willing to take relatively small risk on a solid team for major reward.