When angel investor Chris Sacca announced the launch of his new investment firm Lowercase Capital on Friday, he positioned the news with a lengthy essay – the firm’s “creed” – titled “Venture Capital is Broken.” In it, Sacca observes that ten years ago, it cost over a million dollars for a tech business to launch, with steep hardware, software, office, and Internet costs, not to mention the “lavish parties so print media would write about their pipe dreams.” Sponsor Lowercase Capital’s Creed But today, it is far easier and far less expensive for entrepreneurs to design, code, and launch web services. But, Sacca writes, “many traditional VC funds have been loath to admit this reality and downsize their five hundred million dollar hauls. Why? They are paid fees based upon their total amount of money managed, thus there is no incentive for them to be smaller. Yet, as they try to inject those piles of money into early stage companies, interests become misaligned and an inherent conflict between the investor and the founder often arises. Fund returns, the companies, the entrepreneurs, and the users all suffer as a result.” Sacca contends that Lowercase Capital recognizes the shift in the tech and investment landscape and that the firm offers more than just investment and money management. “We dive in to work with teams that obsess over user experiences, customer happiness, and that, to quote Paul Graham, ‘make something people want.’ Along with relatively small amounts of money, we give them the time, attention, and the empathy that catalyze winning outcomes for all involved. Rolling up our sleeves, we help design front pages, invent new services, prioritize product features, negotiate partnerships, and deal with the everyday professional and personal challenges of startup life.” Is the VC Model Broken? Discussions about whether or not the VC model is broken have been ongoing for some time, although arguably what constitutes “broken” might different for investors and for entrepreneurs. Late last year, Steven Kaplan of University of Chicago professor and Josh Lerner of Harvard Business School published a study claiming “It Ain’t Broke.” But others in the investment and tech communities continue to argue otherwise. In a video interview with GigaOm last month, entrepreneur/investor Chris Dixon, for example, makes a strong case for a shakeup in the way in which traditional VC funding works. What do you think? Is venture capital broken? And do firms like Sacca’s Lowercase Capital point the way for alternative systems of funding and support for entrepreneurs? Discuss

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Co-working – sharing a workspace with others – has become a popular alternative for startups to renting a private office. Not only does co-working help keep overhead low by avoiding the costs associated with renting and equipping an office, it also provides a place for entrepreneurs to work in close proximity to other entrepreneurs. This can combat both the isolation and the lack of expertise that some startups face. Co-working facilities typically offer a workspace and Wi-Fi, with some offering more private offices and others offering more a communal workspace. Prices for co-working facilities vary, depending on the location and the length of the rental (per day or per month). Sponsor The Under30CEO blog recently listed 53 co-working centers around the U.S., based on their list of the Top 10 Cities for Young Entrepreneurs. Their list includes co-working sites in New York, Boston, Seattle, Portland, Chicago, Austin, San Francisco, Atlanta, Phoenix, and Orlando. Commenters on the blog chimed in with their recommendations for other cities, including Washington DC, Oklahoma City, and Rochester, New York. Their list includes: New York City : Sunshine Suites , 3rdward , New Work City Boston : Betahouse , Geek Offices Chicago : COOP , Ravenswood Coworking Group Austin : Conjunctured , Texas Coworking Seattle : Metrix Create Space , ThinkSpace The Coworking Community Blog is another resource to help locate co-working sites in your area. If your city doesn’t have a formal co-working facility, Jelly offers a way to organize informal working events. Jelly’s casual work sessions are held around the world in coffee shops, homes and offices. Of course, Starbucks announced today that it would be offering free Wi-Fi in its stories beginning July 1, making it a bit easier for those of us who simply work out of coffee shops. Discuss

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TechStars founder David Cohen posted an insightful blog post earlier this week that mentioned the impact second generation entrepreneurs are having on the current generation of first-time innovators. As Cohen points out, five companies from the 2007 Boulder TechStars class

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Startup culture is continually growing in the greater public interest, and with that growth comes a sort of celebrity for the founders of the more popular companies. Mark Zuckerberg and Evan Williams are now household names, and in many ways, these entrepreneurs are like rock stars in the startup world. In fact, the journey of an entrepreneur through the startup experience is a lot like that of a musician seeking stardom and millions of adoring fans, and artist Shane Snow has a perfect infographic to illustrate this. Sponsor Snow, a graphic designer, freelance writer, entrepreneur and would-be musician based in New York City, saw his youthful aspirations of topping the rock and roll charts crumble as he and his bandmates went their separate ways after college. During that time he has been writing about technology, running a few startup sites, and designing websites and infographics. One such infographic was inspired by his dual experiences as a musician and an entrepreneur and shows that the path to success for both is marked by similar milestones. For starters, rock bands assemble members of complementary abilities, create a rough-cut demo tape, network with similar bands and begin touring small venues. The same is true for startups, which gather a team of varying skills, produce their first prototype, and begin networking with other startups and investors. Rock bands “bootstrap” by selling merchandise at shows, and startups find themselves signed to an indie record label – also known as angel financing. As the musicians travel thousands of miles playing gig after gig, the entrepreneurs code thousands of lines of code creating iteration after iteration. One day, as Snow’s infographic illustrates, startups could hit the big time with a major record label signing in the form of a venture capital firm investment. Finally, after the eventual superstars live up their popularity to it’s fullest, they retire and either become investors of their own, or crete their own record label to keep the money rolling in. “Starting a rock band is a very entrepreneurial experience.” – Shane Snow One comparison I would have included in the infographic is fact that startups and rock bands alike must stay abreast of their audience’s needs. Instead of churning out the same music over and over, bands evolve to keep their listeners interested and coming back for more. Just think of how different The Beatles were from their first to last album, and think of how different Facebook is from its early days. “Starting a rock band is a very entrepreneurial experience,” says Snow. “I think being an entrepreneur is all about executing creative ideas — being the guy (or girl) who actually starts a band rather than sitting around with friends and talking about how cool it would be, or being the one who actually sits down and builds a prototype rather than just talking about it for years until someone else builds it.” And just as there are no over-night successes in music, the same is also true for startups. They take enormous amounts of effort spread over a long period of time, so don’t get frustrated when your first singles aren’t instant hits. Discuss

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Many of our posts here on ReadWriteStart offer tips on launching your startup and insights on how to become a successful entrepreneur. But as the saying goes, hindsight is often 20/20, and in that spirit we offer a round up of lessons learned from the month of April. Sponsor Build Customers, Not Just Products : Devver co-founder Ben Brincherhoff describes the dangers of emphasizing product development at the expense of customer development. Respond Promptly to a PR Crisis : Blippy ’s response to a leak of customers’ credit card information points to the importance of responding quickly and correctly to potential public relations disasters. Pay Attention to the Technical and the Business Aspects : Startups need to balance both the technical and business sides, as WePay co-founder Rich Aberman advises. Retain Customer Trust : Responding to ongoing allegations about improprieties, Yelp lifted the veil on its review system, demonstrating the importance in being transparent and open in order to maintain both customer trust and company reputation. Know When to Veer Off-Course : As Spark Capital” partner Bijan Sabet argues, it’s important to be nimble and know when to divert from the project roadmap. Hire the Right Execs : This post looks at Ben Horowitz’s thoughts on how startups can be sure to put the right executives in place. Have an Exit Strategy : Although the speculation continues about whether or not Foursquare plans to sell, discussions between the popular location-based service and Yahoo serve as a reminder that having an exit strategy can help you shape the direction of your business. Although these posts document realizations entrepreneurs have had in hindsight, hopefully other entrepreneurs can learn from these lessons and use them to be better equipped for the future. Discuss

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