Red Herring’s Top 100 Innovative Companies

In RedHerring’s Top 10 Trends issue they include the “Top 100 Innovative Companies”. I had a good laugh when I saw AuctionDrop included in the list.

AuctionDrop “simplifies the Internet auction proccess by providing drop-off points for anyone who wants to sell their items on eBay”.

I have looked at similar businesses here in London and passed on them without a second thought. Not because I don’t believe there is a market for this type of service, because there is, or they will not make money, because they will. I simply find it hard to justify backing a company with several million when there are absolutely no barriers to entry to that business.

AuctionDrop has raised $17.2 million from Mobius Venture Capital and Draper Associates in the US. Sorry guys, these are the type of investments that got the VC industry in trouble to begin with. For you to get your IRRs that company is going to need to be a $100 million business in 5 years. That adds up to a lot of trinkets and Star Wars figures…

And Red Herring, what kind of medication are you guys on? Surely you can find better companies out there to include in a Top 100 list, and if you can’t, then make it the “Top 50” list.

Rant off.

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