Has anyone noticed the amount of VC firms that are out there. I can’t count how many I have met in the past few weeks, but it has been a lot. This makes me wonder if VC’s are turning into web 2.0 companies. What I mean is that every day there are probably around a dozen new companies that are announced in the web 2.0 space. It appears VC’s are growing at a similar pace.
Today I had a few interesting conversations regarding web 2.0 companies and VC’s. A big topic was “how much do these VC’s really know?” The consensus from many folks that I have talked to is that a lof of the VC’s out there don’t really know that much. Think about it, if you spend your time researching your target market, understanding your target audience, and building a business strategy then is it really fair for a VC to tear apart your business in 5 mins? How much could they really know about your business when you have been doing the research and building the product (yes there are exceptions)?
Obviously VC’s are the one’s giving you the money to fund your company but come on guys this is pure bullshit. Startups are at the mercy of VC’s since they are the one’s that have the cash. If a startup wants the cash then it has to morph the business/company into whatever the VC tells it too, regardless of whether or not it’s a good business decision. Granted there may be times when VC’s give great advice, but again use your judgment and evaluate what makes sense, you’re just as smart as the VC is. It just doesn’t seem that there is enough VC/company collaboration going on.
Keep in mind that this is just my observation and impression, I know there are some great VC’s out there (I have met some great ones) but a lot of them seem to be complete garbage that have no damn idea what they are talking about. I mean think about it, the VC’s sole goal in life is to make money, that’s it. I’m sure that many VC’s will agree with me, some of them are just clueless and are hoping to strike it rich.
If you are presenting to a VC, don’t look at them as being an authority on your market, because you probably know more than they do (again, there are exceptions). I was talking to a fellow today who told me how he put a VC “in his place” after he explained his business to the VC and the VC told him he needs to change everything in 2 mins! Seriously? If you think you can understand and revamp a business to become successful from just a 5 minute conversation then you need to start your own consulting firm ASAP because everyone in the world is going to want to hire you.
Don’t be scared to push back on the VC’s and tell them they are wrong, show conviction in what it is you are doing. If you get funding but are forced to change around your whole business model into something that the VC wants, then what’s the point? You want funding to grow your company and your vision, not someone else’s. Now, I’m not saying that you should tell the VC’s to go screw themselves because they may have some great advice, but use your judgement. If the VC doesn’t like your idea, then maybe it’s just not the right VC for you to get funding from.
Again I am not bashing all VC’s, because there really are some great quality folks out there that really like to help startups. I just don’t want us to look at VC’s as these almighty entities that we should fear and submit too. Startups let’s show some damn backbone here!
If you are a VC or know a VC, send them this link I would love to hear from them to see what their take is on the VC market and the “new company” market. If you have gone (or are looking to go) for funding then what have your experiences with VC’s been like? (the good and the bad please). What do you think, am I way off base here or does this make sense, what else would you like to add?
(in an upcoming post I am going to go after the companies that are looking for funding, so stay tuned 🙂
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