If you think you have what it takes to be a venture capitalist, you will definitely want to check out VenCorps when it launches in about three months. It lets you try your hand at picking start-ups to invest in.
VenCorps is not an actual fund in which you can participate. If you want to invest real money in a portfolio of pre-public companies, you can't, at least not without inside connections. That's what public company registration, and the public stock markets are for.
Instead, VenCorps lets you pick out the start-ups from its list of company submissions that you think would be good investments. VenCorp invests money in the companies its community members think are best. For users, there's no upfront buy-in to the game. And likewise there's no massive VC-level payback if VenCorps strikes it rich on one of your picks. VenCorps, from the user's perspective, is a prediction market: you pick winners and pay for your picks with your online reputation, and get paid back primarily in kind.
So why bother? Because you can win points, which can be redeemed for prizes, and maybe token cash amounts. And because if you really do want to be a VC, VenCorps, should it ever go into hiring mode, will tap its users who have proven that they can pick winners.
The VenCorps playing field is not level. When you first sign up for the game, the site takes your history and weighs your influence in its rankings based on your work experience, education, and other factors. From that point, your performance influences the weight your votes get: Pick well and your influence increases. Do badly and you sink into irrelevance. But you'll have more influence at the start if you have experience in investing or entrepreneurship.
It is worth mentioning--strongly--that picking companies to invest in is only a part of the venture capital process. Money that's just thrown at a start-up without a parallel investment in time and expertise by the people behind it is called "dumb money" for a good reason. VenCorps' model of crowd-sourcing the investment strategy is, thus, only half the battle; actually doing well for the companies that the fund invests in is just as important. And in this regard, there's a bit of a disconnect: If, for example, the VenCorps community picks a great company in a field that the VenCorps employees (the partners) don't have expertise in, the smart VenCorps money could become dumb, and a potentially good investment could go bad.
So, while VenCorps users may be, "smarter than three white guys in a board room," as instigator Sean Wise says, I'm not sure it's smart enough to give the funded companies the leg up they'll need.
That said, Wise has thought through a lot of the complex prediction market and real-world contest elements in this model. VenCorps is, incidentally, feeding into the Ph.D. thesis he's working on in prediction market economics. There are other elements here that tie the model together: There's a "showdown," or contest, that pits user favorites against each other for a $50,000 prize; and there's an economy behind the reward points that companies can exploit by participating in the model. Also, VenCorps will aim to rope in experienced start-up investors and get them to commit their expertise to making the contests' winners successes in the real world.
So even though VenCorps is to my mind a form of stunt marketing, an "American Idol" of venture investing, the operation might help a few young companies get their ideas off the ground. Certainly, there's no reason that the traditional three-white-guys model of picking VC investments deserves a monopoly on the process.
VenCorps' parent company is Spencer Trask, a serious, non-stunt venture firm. Its $2 billion fund is underwriting the VenCorps project.