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Yup, this is a commitment hack meant to strengthen obligation. In most cases, interests are aligned. When they're not, at least you have a foundation to discuss
by hunterwalk 13y ago
Yup, this is a commitment hack meant to strengthen obligation. In most cases, interests are aligned. When they're not, at least you have a foundation to discuss upfront why they're differing.
- 7Figures2Commas 13y agoI don't know what a "commitment hack" is. If you're suggesting that entrepreneurs can somehow influence venture capitalists to forget that they have fiduciary duties to their limited partners, and to act in a manner inconsistent with those duties, I think you're expecting too much. Sometimes entrepreneurs make life more complicated than it really is. A venture capitalist exists to invest money on behalf of limited partners, and to deliver a satisfactory return to those limited partners. To support that end, he or she will provide some non-financial support to the entrepreneurs he or she funds. There are limits to this of course, and an entrepreneur should never assume that this support will be there indefinitely. When a venture capitalist pulls back his or her support, a discussion about alignment of interests isn't going to be meaningful. If your company isn't doing well (or well enough) or the fund has decided to double down on other investments, a heart-to-heart chat won't change that. Given that many startups fail, and a small fraction supply the vast majority of a successful fund's returns, entrepreneurs who believe their interests are unlikely to diverge at some point are being far too optimistic.