

VC Firms Don't Back You, VC Partners Do - hunterwalk
http://www.hunterwalk.com/2013/04/vc-firms-dont-back-you-vc-partners-do.html

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dottrap
Careful. This borders on Guy Kawasaki's Top 10 Mistakes by Entrepreneurs, Item
10: Befriending your VC.

<http://www.youtube.com/watch?v=HHjgK6p4nrw>

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hunterwalk
I think of it more as creating professional obligation rather than friendship.
It's a commitment hack, no?

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dottrap
Again, be careful here. There is an easy risk that you will over-estimate how
much of a commitment your VC actually has in you.

Guy Kawasaki lists this in his 10 Mistakes too, Item 11: Assuming that your VC
will truly add value.

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7Figures2Commas
I won't argue that a venture capitalist can't be a useful ally, but it's a
mistake to overestimate how much assistance they can really provide when you
need it most.

Venture capitalists doing their jobs owe their loyalty to limited partners. So
long as things are going relatively well or there's reason to believe things
are going to go well, their interests are probably aligned with yours. But
when they diverge, don't expect disinterested advocacy on your behalf.

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hunterwalk
Yup, this is a commitment hack meant to strengthen obligation. In most cases,
interests are aligned. When they're not, at least you have a foundation to
discuss upfront why they're differing.

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7Figures2Commas
I don't know what a "commitment hack" is. If you're suggesting that
entrepreneurs can somehow influence venture capitalists to forget that they
have fiduciary duties to their limited partners, and to act in a manner
inconsistent with those duties, I think you're expecting too much.

Sometimes entrepreneurs make life more complicated than it really is. A
venture capitalist exists to invest money on behalf of limited partners, and
to deliver a satisfactory return to those limited partners. To support that
end, he or she will provide some non-financial support to the entrepreneurs he
or she funds. There are limits to this of course, and an entrepreneur should
never assume that this support will be there indefinitely.

When a venture capitalist pulls back his or her support, a discussion about
alignment of interests isn't going to be meaningful. If your company isn't
doing well (or well enough) or the fund has decided to double down on other
investments, a heart-to-heart chat won't change that.

Given that many startups fail, and a small fraction supply the vast majority
of a successful fund's returns, entrepreneurs who believe their interests are
unlikely to diverge at some point are being far too optimistic.

