Bootstrapping is not a conflict of interest. When people are operating as both VCs and executives there are conflict of interest considerations.
Situations involving conflicts of interests are not inherently unethical, but greater care is needed.
Situations involving conflicts of interests are not inherently unethical, but greater care is needed.
It's not as if VCs are distributing public funds and those VCs that have taken public funds (or pension funds) would likely never engage in a deal like this.
If you think you're 'in competition' with the VCs partners for capital you have it backwards, they have the capital and they can dispense it at their discretion, or even not at all.
Do you agree that there exist hypothetical situations in which a company and a VC firm investing in said company might have differing interests? Doesn't it follow that someone with responsibilities to both parties has a conflict of interest situation?
We're in agreement here.
Because this comes up in practice there are a slew of reasonable ways to deal with these sorts of scenarios. I think the original article's "what do we do about it" section falls nicely into this discussion.
I think the extent of my position here is that VC firms are at a heightened risk of dealing with this type of conflict of interest problem, and would be well served by having clear policies on how they resolve them.
edit:grammar
Beware of who you accept money from, especially if that money comes with strings attached (board seats, various preferences and so on).
This is the distinction my initial comment sought to clarify -- in bootstrapping (as I understand it) a company is funding itself so there is only one party and hence no conflict of interest. When a VC firm funds one of the partners, there might be. Given the particular circumstances this may or may not be problematic.
Would you agree further that it might be wise for VC firms to have clear conflict of interest policies in the same ways it is wise for VC firms and companies in general to have clear HR policies?
I have no particular knowledge of the frequency with which VC firms have sensible conflict of interest policies, but my naive assumption would be that this is again similar to having good HR policies. (Which is to say I am not particularly suprised when a company gets into public trouble in this regard.)
It seems perfectly reasonable, however, for the article author or anyone else to opine on how they'd prefer to see the VC industry run. For comparison, though I am not a resident of Texas it's perfectly reasonable for me to have an opinion about Texas's education policy, especially when the secondary effects impact the entire country.
I am somewhat frustrated and dismayed by (what I perceive as) an inability on your part to respond to my points or questions and a tendency to assign to me ideas I don't hold. As such, I'm tapping out of this discussion here.