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by scottlocklin
2676 days ago
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You tell me > I don't understand how VC ... And you also tell me you don't like being told that you don't understand. Which one is it? Go read what I said again. Now read the following. You are one of N (N being large) investments by VC. Your utility function is to increase your probability of getting rich. Their utility function is to increase their probability of making bonus. How on earth can you assume you are optimizing the same thing? You are not. You're just one of 100 or 200 dice they're rolling. Your success is completely meaningless to them; they want the loaded die, and they want to be able to identify it and bet the house on it. You might have a great idea for a business which makes YOU rich, but if it doesn't fit their model, you're SOL with VC. You may even have a great idea which makes the VC rich. They're not optimizing for your wealth here either: they are optimizing for THEIR wealth, and they will happily take your company, your idea, and all your profit and leave you with jack shit. As such, taking advice from a venture capitalist is like taking advice from a financial advisor that works in a boiler room. Guess what? They don't have your best interests in mind either! They just want to make bonus. Just like the VC. You are product to them. If you've been around the block a few times, you'd know this. I'm trying to tell you how it works, but you keep telling me VCs are your friend and everything they tell you is the truth. They're not! They're almost all scumbags! You should use them to achieve your goals, and that's it! And only a fool takes what they have to say about founding a startup as some kind of revealed truth. It's just propaganda to make their job easier. |
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Thank you for finally highlighting something pivotal in our discussion: the shared interest (or lack thereof) in your success. Like I said, it doesn't totally add up to me. If you remain majority shareholder in your business, it seems hard for them to walk off with more than you would at the liquidity event (e.g, your company is acquired, an IPO, etc).
The truth is probably somewhere in the middle. They're not 100% against your interests, but not necessarily 100% for them, either.