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VCs aren’t your friends
241–250 of 383 posts
Re: VCs aren’t your friends
#242Remember: if VCs believed in what they were doing they would not take a 2% annual management fee and 20% of the upside. They’d take 40% of the upside and live on ramen noodles. VCs make money by raising money from LPs. They spend this money on investments which don’t look too bad if they fail, because nearly all of them fail. Looking good while losing all of your investors money on companies which go broke is the key…
This is the correct take, though it states a truth many don’t want to hear. Even the detractors have not been able to make solid counter arguments. Instead, they pile on hypotheticals to try and overwhelm this comment author (miring in bureaucracy).
Re: VCs aren’t your friends
#243The way VCs filter out potential investments seems fairly similar to the way Ivy League schools filter out potential students. (Probably because they are comprised of the same people.) It is not really about technical brilliance, or innovation, or anything that is written on their website as a core value. It's more about whether you're smart enough and can follow instructions and fit into the overarching institutiona…
> can't imagine someone like Steve Jobs or Nikola Tesla passing these VC/Ivy League kinds of tests. My "favorite" "test" is the one more for soft studies (think law or public policy) rather than STEM: for example UN internships typically have no compensation and they often require you to relocate to extremely expensive CoL areas, meaning there is an automatic filter built in where only children of very well-off paren…
My wife found a workaround for it, which is when she realized she didn’t want to continue her PhD she landed the UN internship and used her stipend money for that year to live in Queens off the 7. It paid off in the long run since it gave her an opening to do contracting for them, which gave her the knowledge to pass the entrance exam (which is its own soft studies filter, since many who passed had received formal private education that included how to pass international org entrance exams)
Re: VCs aren’t your friends
#244They might not be my friends, but they did pay 90% of my salary for the past 22 years...
Re: VCs aren’t your friends
#245Carnivorous sheep - is my favourite unflattering description of VC's.
Ironically this I heard this from somebody who ultimately became one. Perhaps it's Zombie Carnivorous Sheep.
Re: VCs aren’t your friends
#246They might not be my friends, but they did pay 90% of my salary for the past 22 years...
When a VC wants to bankrupt it's competitor it's bad and most of them do the same
Re: VCs aren’t your friends
#247Earlier quoted context omitted.
It is impossible for something in very early stages, that needs money to be "truly compelling". For VCs a compelling product means great traction but to get great traction you need initial funding so it's always a catch 22.
Traction doesn't always mean paying users. Even just having people on a waitlist can be all you need.
I have 70 trillion people on the waiting list. It doesn't mean anything. Only people that pay for your product matter
Re: VCs aren’t your friends
#248> think of a VC as a sales prospect
I think the problem with VCs is that, most generally, they are not good sales prospects, they are pedantic. A good sales prospect is someone who give you feedback, even automated, so you know where you are. Even if they receive a zillion of pitch decks every day (as it is noted in the article), they should have a better process in 2024 to handle that.
I will give you an example as a customer which can be translated: I sent a simple problem to HubSpot and after many chats and email tickets they couldn't solve it! They are advertised as a top CRM, we are happy as customers but I feel there is nobody in the line. On the other hand we are customers of Bizneo for HR/PX and they are happy to make a call and help us. I would expect more feedback from VCs, they are more terrible than banks giving feedback, knowing that they are in a power position but that will not work for long time.
Re: VCs aren’t your friends
#249Re: VCs aren’t your friends
#250Let me throw in one other tip for founders looking to get funded: do not ignore regional VCs. Most of the stories about "how VC works" are 10, 15 years out of date. The cultural "sense of things" lags behind the reality. We found this out the hard way. In fact, contrary to all expectations and myths, VCs (outside perhaps of the top 50 or 100 firms?) read their emails and take cold meetings. They have to. Every region…
I feel like my entire takeaway from a business-y degree at a rather good university kinda boiled down to “don’t go to European VCs, they’re mean and valuations are bad, while providing no upside”.
Will be raising on an idea that makes me look at least a little bit like a lunatic in four weeks’ time, so keen to see how this is born out!