Understand that VCs are simply a sophisticated form of financial investors who, in turn, need to satisfy their own investors.
Sentiment: POSITIVE
One of the biggest mistakes entrepreneurs make is not understanding the relationship they have with their investors. At times, they confuse VCs with their friends.
Great VCs do everything they can to make you successful. But just like your bank, credit card company, mortgage holder, etc. they are not confused where their long-term loyalty lies.
At the end of the day, VCs have to provide their limited partners with great returns, or they aren't going to be able to raise another fund.
I hear so many startups talking about how they can raise VC instead of questioning whether they need it in the first place.
One thing that has made us so successful is that we've never taken outside investment. That means we can concentrate on what our customers want - not what the stockholders or the VCs want.
So many folks in the venture capital business are sheep that just want to follow the herd. They are momentum investors purchasing highly illiquid investments. That is a recipe for disaster.
Many entrepreneurs have shifted their focus to pursuing VC funding as a primary strategic priority instead of concentrating on generating value for their users. This is worrisome because raising capital alone is misleading as a benchmark for success.
But successful investors tend to be not too self-destructive. They tend to be patient, they tend not to follow the crowd, and they tend not to be too guilty about winning.
VC firms are... responsible for the full life cycle of a company: they find it, help it grow, open up a Rolodex, and sell it.
We worked personally with a lot of great VCs. They just work incredibly hard at supporting entrepreneurs and their companies.