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One person has $100 million that they'd like to turn into $1 billion. Another person has a plan that is likely to fail, but it's new territory with great potent
by mcbits 9y ago
One person has $100 million that they'd like to turn into $1 billion. Another person has a plan that is likely to fail, but it's new territory with great potential. If no deal happens, one person still has $100 million while the other still has their unexecuted plan and hopefully a job or something.
The power imbalance is pretty obvious in that kind of scenario. It's less of an imbalance if the entrepreneur is also wealthy and just raising money to share risk or build alliances.
Point is, if you have multiple millions of dollars, "do nothing" is always on the table, which isn't so for many founders.
- Alex3917 9y ago> If no deal happens, one person still has $100 million while the other still has their unexecuted plan and hopefully a job or something. The power imbalance is pretty obvious in that kind of scenario. I don't see any power imbalance that exists within the relationship here. Compare this with the laws that prevent a therapist from dating a client, which are in place because one party can take advantage of the other or blackmail them or have them involuntarily committed. That's a power imbalance. I also think this is a very orientalist view of the industry. How many founders actually raise institutional money off just a deck each year, who don't otherwise have the skills to earn a lot of money consulting or whatever? I'm not trying to defend the behavior here in any way, I just think that the reason why it's wrong for a VC to aggressively proposition a founder or whatever is different than, for example, what makes it wrong for an employer to have a relationship with an employee.