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January 23, 2006

“The Grass Is Always Greener”

Jeff Bussgang has a great post on how entrepreneurs envy VCs, how VCs envy their Private Equity cousins who, in turn, envy hedge fund managers.

Is there anyone that the hedge fund folks envy? Yes, says Bussgang: Entrepreneurs!

I often hear them (hedge fund executives) discuss with envy the life of the entrepreneur – cycling through exciting new start-ups every 5-6 years and then taking long sabbaticals in-between gigs. Meanwhile, the hedge fund executive is chained to every international market every minute of the day for fear they miss spotting the latest currency or interest rate fluctuation. Entrepreneurs actually create things of value and leave a mark on society, rather than simply financial engineering.

And that nonsense about money flowing in so fast being such a great thing? Remember, it can flow out just as fast. And, besides, the hedge fund business as a whole has little barriers to entry and struggle to find true proprietary elements of the busines, resulting in too much money chasing too few good investment opportunities. Those entrepreneurs who can come up with original ideas, build proprietary technology and products, and then sell them out get all the glory, reap all the rewards and then unplug.
Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.