Variant Investment Partners: Early-stage VC is a market for ideas

Author: Alana Levin, Variant Fund Investment Partner; Translator: 0xjs@黄金财经

When I was young, I was obsessed with the concept of a marketplace for ideas. The original idea was that people would go online, post the first few sentences of their ideas, and if people thought the idea was good enough, they would bid for the right to build it (and see the rest of the post). Builders who hoped to have the relevant experience or willpower to realize the idea would use the market for inspiration, and the person who came up with the idea would receive a small compensation for sharing.  

There are many reasons why this structure doesn't work. But now, more than a decade later, I think I have found another form of marketplace for ideas: early-stage VC. Investors who write the first check for a startup can sometimes help actually generate product ideas. Sometimes they are even the ones who bring the idea to the world. Almost by definition of a first-time investor, the future opportunities are unknown. As a result, early-stage venture capitalists are often rewarded for actively expressing what they want to see realized.  

It’s a marketplace for ideas. Early-stage VCs can push ideas out into the world with the goal of getting the right people to see and be inspired by the idea. The hope is that a Builder will then reach out, either to discuss the idea further or to seek funding. VCs are well incentivized: if the idea is good, the opportunity to invest and share in the proceeds can create economic synergies.

One of the core problems with 12-year-old Alana’s version of a marketplace for ideas is the problem of ownership of ideas. VCs solve this problem: even if a hundred people have the same idea, the benefit is in finding and picking the best person to make it happen. Likewise, even if someone else had the idea completely independently, perhaps they saw you publicly thinking about a similar concept and decided to reach out to you. 12-year-old Alana's marketplace of ideas rewards people for having ideas, whether or not those projects succeed. Venture capital aligns the financial interests of idea generators with actual execution.

Few marketplaces put "buyers" and "sellers" on the same page. My favorite early-stage VC is one of them.