Joel Spolsky wrote about this 16 years ago: https://www.joelonsoftware.com/2003/06/03/fixing-venture-capital/ https://www.joelonsoftware.com/2003/06/03/fixing-

Joel Spolsky wrote about this 16 years ago: https://www.joelonsoftware.com/2003/06/03/fixing-venture-capital/ https://www.joelonsoftware.com/2003/06/03/fixing-venture-cap... The fundamental reason is that VCs do not have goals that are aligned with the goals of the company founders. This creates a built-in source of stress in the relationship. Specifically, founders would prefer reasonable success with high probability, while VCs are looking for fantastic hit-it-out-of-the-ballpark success with low probability. ... Even though the second model has a lower expected return, it is vastly preferable to most founders, who can’t diversify away the risk, while VCs who invest in dozens of businesses would prefer the first model because it has a greater return. This is just Econ 101; it’s the same reason you buy car insurance and Hertz doesn’t. Though to be fair, he also explained why he took VC for StackOverflow at Startup School 2012. Basically this: https://www.joelonsoftware.com/2000/05/12/strategy-letter-i-ben-and-jerrys-vs-amazon/ https://www.joelonsoftware.com/2000/05/12/strategy-letter-i-... tl;dr StackOverflow has a network effect and needed to scale fast.