Investors think they’re more impactful than they are

As my philosophy of funding has evolved, I've come to see venture capital as fuel for growth first, and then a relationship with a VC second.

So if you don't have a tested company/product that seems poised to grow quickly if only it could get additional capital, you should probably be questioning the wisdom of taking capital in the first place.

If you do have such a company/product, then you should be in a position to be selective, because not getting the capital shouldn't kill you, it will only slow you down. The risk here is that a competitor may catch up to you, which is somewhat less threatening than immediate existential risk.

The selectivity gained by having a tested product will allow you to choose a VC along other dimensions besides the valuation and investment - e.g. network, recruitment, etc.

To me, these seem like they could be highly valuable if chosen strategically. Perhaps you can get huge discounts from a supplier, or maybe there is a politician or bureaucrat in the network that can help you get certain exemptions from cumbersome regulations. Or maybe the VC is a former founder that has solved a similar problem to the one you're facing. Any of these could give you an edge.

I understand that being able to bootstrap to such proven position might seem like a luxury status that few early stage startups can attain, but I would counter saying that probably there are a lot of early stage startups that aren't mature enough to seek funding yet who ultimately end up with an unhelpful VC, and the data in the article seems to suggest that's true.

Reminds me of this twitter account called "VCs Congratulating Themselves"[0]. It's very amusing to see how delusional some investors are.

[0] https://twitter.com/VCBrags

Aside from the value VCs provide in the form of raw cash, I like to think of investors the same way employees should think of stock options. In the majority of cases they won't be very valuable (no matter how valuable they pitch themselves to be), but in rare cases they can be very valuable. It's a gamble.

I heard someone call VCs glorified banks and it’s a pretty good picture

This was the key tl;dr moment for me from this post:

> All of this highlights (again) why performing due diligence on potential investors is so important. We’ve just come through a market that was moving extremely quickly (too quickly, in my view). On the venture side, there was plenty to be concerned about in the need to make investment decisions so quickly. Overlooked was the challenge that placed on companies, who were making an equally important decision and entering into long-term relationships without the chance to meaningfully look into the firms that were courting them. Exacerbating this speed were valuations that in many cases were out of touch with reality, putting more pressure early in a company’s relationship with its new financing partners around company performance and trajectory. None of these dynamics allowed companies or their investors to form the basis for a longer-term working relationship. Hopefully, the new market dynamic will allow for more of this.

Of course, the author is an investor (one of the partners at the Foundry Group) so he's talking his book a bit. But the fact that the speed of investing in recent times impacted alignment is worth calling out.

IMO a better title for this blog post would have been:

"VCs and startup CEOs disagree about what the investors bring to the table"

There's no "actually" here, it is two parties who both stereotypically have an over-inflated view of their worth.

Are investors really offering anything more than money, and, occasionally, experience?