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VCs aren’t your friends

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Re: VCs aren’t your friends

#191

Post by openrisk »

In transactional financial markets "friends" is not the right word, but there is something to be said about more or less effective alignment of interests and that is purely a matter of design.

There is more than enough money sloshing around, it all boils down to designing contracts and suitable information exchanges between parties. So anybody thinking that the current system is sub-obtimal can try their hand at disrupting the VC system and making history :-)

An arrangement that better utilizes the majority of the entrepreneurial crowd's energy and time is likely to at least carve a niche, if not dominate. It may not even be that hard. The chasing of planet-scale returns (with the corresponding discounting of the rest 99.99%) is a recent phenomenon and may be just an aberration.

Re: VCs aren’t your friends

#192

Post by csomar »

kasey_junk wrote: post #176
csomar wrote: post #111

Earlier quoted context omitted.

I highly doubt trading costs are part of the 2% management fee.

In my experience they absolutely are part of the 2% fee. Why do you think they aren’t?

In that case, how can the rate be fixed or does that mean that the hedge fund limits its trade turn-over. In other words, if your trading fees are 0.2% and your trading volume is 10 times the capital raised, you already burned through your management fee.

Re: VCs aren’t your friends

#193

Post by leashless »

csomar wrote: post #187
saberience wrote: post #127

Earlier quoted context omitted.

What? That makes no sense. VC is a job like any other, it takes time and work/effort etc to produce output, it's also a job where you can improve with skill and experience. Just like writing code takes effort and skill, why would you spend 10 years writing code full-time for "free"? Just like no one would edit books full-time for free, or write code full-time for free, or teach kids full-time for free, VC's wouldn't…

> VC is a job like any other No, it's not; or at least not supposed to. That's what communism is (regular plebs of the working class deciding how to allocate resources with no skin in the game). It's funny that I heard a VC the other day claiming the US is turning into the Soviet Union...

So... where's the magic pixie in this story? If VC is not a job -- and remember most of the junior people in funds, it's like their first job in finance -- then what is it?

I mean you've gotta define terms here...

Re: VCs aren’t your friends

#194

Post by renegade-otter »

caseyy wrote: post #20

Most business founders don’t need VC money and are worse off for taking VC money. I find the mindset “my pitch deck was 2 months old so I didn’t get funding” very out of touch of business realities. It is far more likely that that type of business doesn’t need VC funding. Your SaaS can probably be built with your daytime developer salary. No VC ever says “wow, what a great investment opportunity, one of the best, but…

As someone who took more than a year off to build his SaaS - the days of stitching together a prototype at night are pretty much over. You need to be an incredible hustler and have a really good insight into a desperate business need.

Customers today expect polish and few bugs right out of the gate. I spent months on polish alone. If you don't, your product is going to be savaged like this:

"Former Yahoo CEO Marissa Mayer’s New Photo-Sharing App Has a Design From the Stone Age"

https://gizmodo.com/marissa-mayer-new-app-shine-photo-sharin...

Re: VCs aren’t your friends

#196

Post by duggan »

fakedang wrote: post #186
spullara wrote: post #56

Earlier quoted context omitted.

Nah. I know a VC that passed on Apple because Steve was 20 min late to their meeting.

Honestly, I would have too, if I were in that VC's place. Hindsight is everything obviously but at that moment, if a founder were to arrive to an important meeting 20 minutes late without good reason, either the meeting was of little importance to the founder, or the lack of punctuality speaks volumes of his dedication to his company and his potential partners. Dave McClure once told me that he passed on Travis Kalan…

If lack of punctuality being used as a signal causes these VCs to drop Steve Jobs or Travis Kalanick I think it's safe to say it doesn't speak volumes.

Otherwise you're optimizing for criteria other than "selecting whether to invest in Apple or Uber."

Re: VCs aren’t your friends

#197

Post by benreesman »

openrisk wrote: post #191

In transactional financial markets "friends" is not the right word, but there is something to be said about more or less effective alignment of interests and that is purely a matter of design. There is more than enough money sloshing around, it all boils down to designing contracts and suitable information exchanges between parties. So anybody thinking that the current system is sub-obtimal can try their hand at disr…

Financial accountants have a line item for not being a dick. It’s called “goodwill”. No shit.

Re: VCs aren’t your friends

#198

Post by tlogan »

VCs primarily provide capital, and that's their essential role. They aren't there to be your friends or mentors.

Remember, if you mix friendships with financial asks, you risk losing those friends.

So, VCs are a great resource for funding, perfectly suited for what they're designed to do!

Re: VCs aren’t your friends

#199

Post by mepiethree »

keiferski wrote: post #21

The 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…

There are SO MANY VCs and every VC is different. if your idea is truly great there is probably one whose investment thesis is aligned with your idea

Re: VCs aren’t your friends

#200

Post by mepiethree »

tlogan wrote: post #198

VCs primarily provide capital, and that's their essential role. They aren't there to be your friends or mentors. Remember, if you mix friendships with financial asks, you risk losing those friends. So, VCs are a great resource for funding, perfectly suited for what they're designed to do!

Some of them do like to pretend to be your friend after they’ve invested, though. Don’t fall for it :)
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