An idea that has recently been spreading through the VC and innovation blog niches is that the VC industry is ready to be disrupted. Here's a "meme highlight reel" that showcases the best of this conversation.

Jeremy Wright: Notes that VCs need to add value by offering better support to their entrepreneurs, and give them training, knowledge, and connections. Capital is still needed, but less of it.

Fraser Kelton: Echoes a lot of what Jeremy and others say, and lists some things VCs need to focus on: customer service; allowing for partial founder buyouts; finding a niche for them to invest in; resisting the tempation to be an ATM; and raising less and investing less money. Fred Wilson has a good post on it as well, refuting some points and echoing others.

So let’s start a new company, with Rick Segal as the CEO (if he’ll do it) called User Internet Capital Corp or something catchier. File all the right paper with the SEC, and do an IPO. You have to, because we’re going to be selling shares to the public right at the start. This thing will be public from day one. The purpose of the company will be to invest in promising young Internet companies, chosen by the users, nurture them through startup, get them liquid through acquisition or IPO and distribute dividends to the shareholders accordingly. Retain some cash for overhead and (I insist on this) a small percentage for pure technology research and development, so there will be new ideas to base the startups of 2009 and 2011 on.

I agree that the VC industry is primed for disruption; as knowledge becomes more valuable than capital, VCs who relied on capital-intensive strategies will lose the market to new VC firms that can focus more on providing knowledge and less on providing capital to their entrepreneurs. If the new basis of competition is the ability to deliver knowledge, than a knowledge bank/information resource type of site may be in a prime position to launch such a disruption. Such a site can use free information to attract entrepreneurs, and can leverage this network of entrepreneurs to find businesses that are looking to satisfy entrepreneurial needs. Ultimately, I think it is a platform that will disrupt the VC industry in a way that is similar to how the SEO industry could be disrupted by a platform.

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