Early Stage VC is an Idea Marketplace

When I was younger, I was obsessed with the notion of an idea marketplace. 

The original concept was that one would go online, post the first few sentences of their idea, and people would bid on the right to build it (and see the rest of the post) if they thought it was a good enough idea. The hope was that builders with the relevant experience or willpower to make an idea work would use the marketplace to find inspiration, while the people who came up with the idea would receive a small bit of compensation for sharing. 

There are many reasons that structure wouldn’t work. But now, some decade-plus later, I think I’ve found a different form of an idea marketplace: early stage venture capital. Investors who write the first checks into startups can sometimes help with the actual generation of the product idea. Occasionally they are even the ones to put an idea out into the world. Almost by definition of being first-check investors, the opportunity set isn’t known. The result is that early stage VCs are often rewarded for proactively vocalizing what they’d like to see built. 

This is an idea marketplace. Early stage VCs can put ideas out into the world, with the goal that someone well-matched will see it and derive inspiration from the idea. The hope is that then builders will reach out, either to chat more about the idea or to ask for funding. VCs are well-incentivized: if the idea is good, the opportunity to invest and share in the upside creates economic alignment.

One of the core problems with 12yo Alana’s version of an idea marketplace was around attribution for the ideas. Venture capital solves this: even if a hundred people run with the idea, the upside lies in finding and picking the best person to build it. Similarly, even if someone else had the idea entirely independently, maybe they see that you’re thinking publicly about a similar concept and decide to reach out. 12yo Alana’s idea marketplace rewarded people for ideas, regardless of whether those projects panned out. Venture capital aligns the idea generators’ economic upside with the actual execution.

There are very few marketplaces that put both the “buyers” and “sellers” on the same side. I love that early stage VC is one of them.