As the amount of money raised by venture firms shrinks, older firms that were around before the dot-com bubble will benefit, said Michael Taylor, a managing director at HarbourVest, which invested in Battery’s fund. These firms have track records, brand names and knowledge about how to avoid making mistakes that younger firms do not necessarily have, he said

This is a quote pulled from an article related to the successful raise of Battery Ventures new $750M fund. And, I’ve been chewing on it for the last few weeks.

The assertion here is that as capital becomes scarce, entrepreneurs are going to be attracted to stability, pedigree and longevity that younger firms, like mine, don’t have. 

Shortly after reading this quote I got a call from a company we’ve funded. They had a dilema- multiple termsheets from a variety of firms. A nice problem to have, but a real problem none the less. As we talked through the options one of them said “we have a termsheet from a firm that’s been in business longer than I’ve been alive and another from a firm that has been in business for less time than we have”.

In the end, they chose to go with the newer firm. In this case, that established firm’s pedigree and longevity was actually a negative as the entrepreneurs perceived their experience as dated. They were seen relying on successes garnered in heady days whose fundamentals, or lack thereof, don’t translate to the world we live in today. 

Its interesting having a front row seat to an industry in transformation, especially when its your own. Though its unclear how things will shake out across venture biz, but I’m encouraged by the new blood firms like OATV are pumping into the overall system and hope to avoid some of the “mistakes” that Mr. Taylor eludes to above.