Fortuna

Cornell's annual Entrepreneurship Celebration took place this week, giving students and alumni alike the opportunity to see some of the magic and creativity that is lurking below the surface of the University. BR Ventures hosted the Cornell Venture Challenge, a business plan competition judged by VCs and industry experts. As a new manager of the fund, I got to sit with the judges as they deliberated and see firsthand the art that goes into selecting a promising business.

I say "art" because there was nothing scientific about the process. Five smart guys sat across the table from each other, bounced around their thoughts, critiqued, criticized, complimented and chose winners and losers, taking themselves and their jobs very seriously, but making sure to crack a few jokes along the way. And in a nutshell, that's what VCs do--sure there's due diligence and expert advice, valuation, etc. but it's all highly subjective and at the end of the day, the only true authority is hindsight. The truth is that if venture capital were a science, than the good scientists would be very very rich and there would be no bad VCs left to lose.

I'm currently taking a course on valuations and the looming theme that Professor Weinbaum stated upfront is that valuations can be (and are) molded to arrive at almost any desired outcome. In effect, an "artist" can decide on the value a priori and then use a valuation to provide proof of its veracity. Someone with even an amateur (undergraduate) background in philosophy such as myself has got to laugh at this methodology. Descartes would undoubtedly get a kick out of valuations.

If it all seems pointless and futile--if VC seems like little more than a crap shoot--then business itself might be reduced to a mere game of poker, where strategy and observation play a role, but luck deals the cards. I think that luck is more relevant than most of us would like to believe, but at the end of the day, our very human skills of perception, negotiation, understanding and interconnectedness--in fact, our feelings--serve to elevate gambling into good business, if only we have the experience to back them up.

Congratulations to all the finalists and Bombyx, the winner of the Cornell Venture Challenge. And good luck!