A lot of good answers here, to which I will add that the people writing checks often spend less time evaluating startups than do companies evaluating employees.

A lot of good answers here, to which I will add that the people writing checks often spend less time evaluating startups than do companies evaluating employees. Consider that to get hired at a small company, you might be subject to 8+ hours of interviews over multiple days, where you are expected to demonstrate some basic understanding of your craft. Frequently, the interview circuit for a small company will include some time with the CEO or other senior executive. Contrast this with a VC funding a small company. The VC will likely not spend 8 hours evaluating the company, much less 8 hours talking with the company. If the VC is larger, they will likely not have its senior executives meet anyone from the startup. In all likelihood, a company that receives a few million of funding has only been evaluated for less than half of the time that same company spends evaluating each prospective hire. I would be surprised if it is common for VCs to even run on founders the basic checks companies commonly run on prospective hires (credit checks, drug screens, criminal background, etc.). Basically, companies scrutinize potential employees more thoroughly than VCs do companies before funding them.