Why Do Venture Capitalists Replace Founders Of Startups?

I would be very skeptical about the opinions from self-proclaimed VCs whose merit of producing viable venture-style investment returns you as an entrepreneur cannot verify.

The problem in Silicon Valley is that the emperor wears no clothes, as the vast majority of VCs do not make consistent monolithic venture-style returns for their investors (the limited partners), not in the least because of the subpriming of the investment thesis by implicit collusion, and the (micro) private-equity risk-profile applied incompatible with a consistent yield of venture-style returns.

Only a handful of VCs produce viable venture-style returns, sometimes helped by a cunning musical-chair game of concurrent and stacked funds, and even fewer with deals with the renewable socioeconomic value the world will continue to care about, once the financial engineering part has run its course past IPO. And we all know about the desperate hysteria that comes with the musical-chair game. So to answer your question, wisdom does not always dictate the impetus to course-correct, if you catch my drift.

The compass of most VCs is entirely irrelevant. As irrelevant as asking any person on the street what they think about parenting when that person is not the person you intend to marry and have children with anyway. In sync with that corollary, make sure your VC understands and agrees with the trajectory towards the upside of your foresight so that the VC you “marry” can see the forest of foresight through the trees of downside.

Investigate the merit of your VC partner thoroughly, because a bad date will make for a disastrous marriage, in which the absence of a prenup will make you lose so much more than your VC partner will. Not in the least your pride.

 

 

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