Criticism
In a 2005 blog posting, Bill Burnham criticized the "deal flow-centric view of venture world premised on a passive approach to venture investing that essentially subscribes to a 'build it and they will come' theory of venture investing". Burnham cites statistics showing that in the 1980s, high rates of deal flow were easy to achieve because of the relatively high numbers of entrepreneurs and low numbers of venture capitalists. Now, he argues, venture capitalists have increased in numbers, such that, except for the very top firms, most VCs cannot rely on passive deal flow to sustain operations. Burnham advocates what he calls "Thesis Driven Investing", whereby a VC firm decides upon one or more investment theses, then "they go and out and 'turn over rocks' actively looking for deals that fit their investment thesis in a particular space."
Read more about this topic: Deal Flow
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