

Conflicting goals between VCs and entrepreneurs - amichail

It seems to me that VCs and entrepreneurs have conflicting goals.  VCs are looking to hit a home run in one out of ten attempts.  Entrepreneurs are looking to maximize their probability of financial independence -- which is a different goal altogether involving less risk and a lower payoff.
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klein_waffle
Yep. Joel Spolsky summarized the risk/reward imbalance in an article:
<http://www.joelonsoftware.com/articles/VC.html>

This one is a bit more personal and rather bitter: "An Engineer's View of
Venture Capitalists".
[http://www.spectrum.ieee.org/careers/careerstemplate.jsp?Art...](http://www.spectrum.ieee.org/careers/careerstemplate.jsp?ArticleId=i090101)

This guy's main experience was in the 1980s, so it doesn't take into account
technical people who got rich in the 90s boom and then went into VC. So things
may have somewhat improved, in that you might find VCs who really grok your
idea. Nevertheless, that doesn't address the mismatch of incentives.

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gigamon
Take a look of the following which is my on-line book in progress. One of the
chapter is entitled "How to turn your VC into your worst enemy".

<http://www.startupforless.com>

At the end of the post, there are quite a few links for comments from
successful entrepreneurs on their experience with VC's. My own advise is to
deal with VC's as what they are, not what you think they are.

Do not romanticize, but also do not demonize.

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sethjohn
I've been thinking a lot about the 10x rule recently. There was a post on
YCnews a few weeks ago suggesting that the real success rate was much closr to
50%.

<http://news.ycombinator.com/item?id=74562>

At a panel of Boston-area VCs I attended, each of them said they had no idea
where the mythical 10x number came from and that their success rate was closer
to 50-90%. I seem to remember YC suggesting the sucess rate was much higher
than 10%.

Granted a lot of these 'successes' are companies that are barely managing to
stay in business...but they haven't gone bust either. Maybe a better way to
look at the situation is that the VCs want to keep as many companies above
water as possible in hopes that some smaller percentage will be a huge hit.

Bottom line, I don't think the goals of VCs and entrepeneurs are really as
divergent as the 10x factor suggests.

