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This is sort of true, but what it misses is that money and power are only loosely coupled. The real story is that VCs have decreasing power over the companies
by pg 14y ago
This is sort of true, but what it misses is that money and power are only loosely coupled. The real story is that VCs have decreasing power over the companies they fund, regardless of the deal size. For example, it is now the norm among YC startups for the founders to retain board control even past the series A round (which itself is increasingly a de facto series B).
Curiously, one reason this is happening is that VCs are realizing that they didn't need as much power over founders as they had. All the returns come from the big winners, and the big winners don't need to be told what to do.
VCs may well make higher returns with less power.
- AdamFernandez 14y agoDo you sense this is a philosophy that is taking hold with most VCs currently?
- pg 14y agoLike most trends among VCs it has started at the top. The top west coast firms are the most willing to concede power to founders. Lower-tier firms, and firms in other places, are less willing to, largely because in this as in other respects they're always a few years behind. I say largely because lower-tier firms have a different and less trusting relationship with companies they fund. They assume that if a company had to resort to raising money from them, it won't be one of the big successes. They are the hotel where the TV is bolted down so the guests don't steal it.
- AdamFernandez 14y agoThanks. I like the analogy.
- deleted 14y ago[deleted]