Peer Venture Partners is an important evolution in the life cycle of new companies. Because of changing conditions in the markets of innovation – capital requirements, sources of innovation, talent, etc. – Peer is turning traditional venture capital on its head, similar to how blogging turned journalism upside down.
Jared Hutchings and Mark Campbell previously were the managing directors of the University Venture Fund, a successful fund that coinvests with VC firms and is run entirely by students. Jared and Mark have expanded the UVF model, with a few improvements, to some of the most entrepreneurially prolific campuses in the US: Stanford, Berkeley, MIT, Harvard, and Wharton. By employing student associates on these campuses, Peer does several important things:
- Builds a network of talented prospective entrepreneurs
- Crowdsources investment decisions across a diverse group of talented people (who are largely unencumbered by the status quo)
- Seeds fertile innovation breeding grounds with informants who can be the first eyes on emerging technology
I think this will work. There are other ways of attacking the funding gap faced by many new companies – Y Combinator is a notable example – but I believe in the Peer model for a few reasons:
- It’s critical to identify breakthrough technologies early. Peer will have a huge advantage by physically being in the labs, coffee shops, and study rooms where innovation is happening. Favorable deal terms, trend spotting, network development, etc.
- In a similar vein, it’s advantageous to identify breakthrough entrepreneurial talent early. There was a recent meme tipped off by Fred Wilson about the role of youth in revolutionary ventures.
- Why couldn’t part-time VC associates, in addition to their day job as students, be successful deal spotters? Professional VC’s get it wrong all the time. If a former lawyer can use an “amateur” medium to create one of the most popular technology publications, why couldn’t a VC fund leverage a distributed network of passionate amateurs to identify investments? It’s not a new idea, just new to venture capital. (See Wikipedia, Linux, Apache, etc.)
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