Does Cream Rise To The Top?

The Richard Report has a major theme that brokering 'something' is best achieved by the market deciding who or what is best using the 'wisdom of crowds' rather than the seal of approval of the broker. But is it that simple?. At Connect, a key selling point of our service is that we help put forward the best propositions to investors so they don't waste their time filtering out the 'bad uns'. Can Web technology ensure the cream of the crop rise to the top without the broker being the ultimate discriminator of what is best?

How do you find 'good uns'? If you follow the natural selection approach, you need an innovation ecosystem that encourages mutations and experimentation and let the marketplace decide those that are best i.e. most likely to survive and hence reproduce. As Nobel laureate Linus Pauling said: “have lots of ideas and throw away the bad ones…. You aren't going to have good ideas unless you have lots of ideas and some sort of principle of selection.”

With MyDealMaker we are trying to develop this approach to complement and extend our physical pitching events. Within reason anyone with what they think is a bright idea can put up their profile. We can try to give some quality assessment based on our engagement with the entrepreneur. Have they gone through our Investor Readiness Programme? Have they taken the trouble to fill out a detailed profile etc. But where it gets interesting is if, as Richard's suggests, the portal offers the functionality necessary for the market or software itself to promote the best and demphasise the rest.

But lets not get too carried away with all this. Online screening is just that: its a filtering process that can reduce the many to a few based on something more than a one dimensional view of quality or who you stood next to in the queue for the food at a networking event. But just like you don't buy an house based on its profile on RightMove, entering into a meaningful relationship with a business advisor or investing in what appears to be a bright idea on paper requires a little more interaction than can be done online. Physical engagement is still needed to seal any deal!

So I'm with Doug Richard on this - the brokerage need to provide the marketplace first and foremost and this provision and any signposting ideally should not consume a signicant percentage of the transaction it facilitates. Online brokering portals that match those with a need with those best able to provide it have the potential to change the balance of responsibility between brokers, providers and consumers and more importantly improve the efficiency and effectiveness of the marketplace.