Children as venture capitalists?

In yesterday's entry we mentioned that entrepreneurs come in all ages and generations-- it seems venture capitalist investors also see this trend and are capitalizing on it. In fact, they are going one step further -- they're using children (tweens and young teens), not to start businesses, but for advice on what's hot in Web 2.0. As you can imagine, all investors are trying to get in on the next Myspace and YouTube.

The New York Times article, "From the Lips of Children, Tips to the Ears of Investors," describes the venture capital investors as a "notoriously self-assured bunch" who admit "some innovations may be lost on their g-g-generation." (It's good to hear the investors are finally admitting this…. It took a while!). As the article points out, "the trend may indicate the rise of something new in the venture capital industry itself: humility." (It’s about time! They dont call them "vultures" for nothing.)

The main reasoning behind using children to assess the new technological terrain, as explained in the article, is:

"as the investors themselves are aging, the technology — including social networking Web sites and mobile gadgets — is designed for, used by and sometimes built by people half their age.

Young people… may be better equipped than investors, who tend to be in their 30s or older, to see nuances and identify trends."

We agree. This may be a great way to teach children about entrepreneurship and business. However, we do believe there should be other qualifying factors involved in an investment decision—not just the word of a child. Though, we do hope the children are being justly compensated (it's not fair if the investment company makes millions based on the advice of children but the children don't benefit.)