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Investors are incentivized to not only pick the founders they think have a very high chance of huge success, but to make as many founders as possible think they
by ryanwaggoner 15y ago
Investors are incentivized to not only pick the founders they think have a very high chance of huge success, but to make as many founders as possible think they belong to that group. If they're right, big rewards. If they're wrong, the founders (and LPs) pay the price.
More: http://www.paulgraham.com/venturecapital.html http://www.paulgraham.com/venturecapital.html
- jdp23 15y agoGreat point. And founders who have taken the 90-hour-a-week path are emotionally incentivized to believe it's the only path to success -- because if not, they could have made different tradeoffs.
- pg 15y agoThe VC firm in business for the fees was mostly a product of the Internet Bubble of the late 90s. There were still a significant number around when I wrote that 6 years ago, but in the last few years (and particularly since 2008) the bad firms have been ruthlessly pruned. No VC whose name you recognize will invest in bad startups to get the management fees.
- YuriNiyazov 15y agoI don't think that's any different from most other institutions that "accept" people for challenging endeavors. If you are accepted into medical school, work insane hours, and then fail out, you still have the loans to pay back.