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They hedge your risk of time and effort by giving you resources of capital, networks, IP to make things happen plus a bonus if the startup gets traction enough

• MCRed 11y ago
  They also greatly increase the likelihood that your startup will go bankrupt, and decrease the likelihood that it will be moderately successful. Thus they do not hedge your financial risk they increase your risk. VC only makes sense if you are bound and determined to make a billion dollar, or at least 100 million dollar company. They do not give you access to networks IP or make things happen, they give you money and then they double dip on the backend. The romanticized view of VCs present on this site is not reflective of reality... or my nearly 30 years of dealign with them.
• dboreham 11y ago
  I think I may not have made my point sufficiently clear: I'm well aware of the mechanics of VC funding. I wasn't talking about that, but rather specifically the label "lifestyle company". VCs tend to use the term as a pejorative, implying that a person who owns a business should not seek to improve their lifestyle. My observation is that the difference between the self-funded and VC-funded scenario, as regards "lifestyle" optimization is only who's lifestyle is being optimized (the business owner in one case, the VC and their investors in the other case). The VC isn't going to give up their fancy Sand Hill offices and the Tesla any more than the self-funded entrepreneur is going to give up their quality time with their kids and family.