Over decades of advising startup CEOs, I've seen startups die because they thought VCs were their friends. I'm going to tell you why they're not.
For founders, venture capital is a means to an end. You either raise money because it's an existential need (you can't launch or survive without outside capital) or because it creates an opportunity for unnatural growth (you're profitable but could become much bigger if you could temporarily spend more).
Raising capital is neither something to be celebrated nor denigrated, in the same way we don't judge someone getting a home mortgage.
But for VCs, investment *is* the end. The entire business model only works if their portfolio companies produce outsized (50X) returns. This is why VCs disparage "lifestyle businesses" -- organic growth and profitability don't serve their business ends.
Venture capital is like dating apps.
Tinder doesn't want you to find everlasting love. They lose you as a customer when you permanently pair off. Tinder wins when you connect with someone for a while and then come back again and again. Dating apps win when dating is a treadmill.
VCs win when funding is a treadmill.
Again, this is not an indictment of VCs. I met my fiancée on a dating app. I've raised venture capital for several startups and had positive outcomes. Investors, like OKCupid, provide a useful service.
But they do not want what you want. You are simply temporarily aligned.
PLEASE NOTE: Jenny is an amazing human being. I point all my clients to her "building an investor pipeline spreadsheet" deck. I am an LP in one of her funds. You would be lucky to have Jenny as an investor.
Just remember -- she (and every other VC) wins when your company sells for 50 times at which she invested in you. You win when your company is still operating next year.
#startups #fundraising #venturecapital