Updated: Top Ten VC Lies

From a recent (highly playful) presentation of mine, here is my list of the top ten lies venture capitalists tell. Imagine it being read in reverse order, from 10 to 1, a la Letterman:

10. We’re all on the same side here.
9. A lower Series A valuation is good for you too.
8. We’re not funding XXXX companies anymore.
7. I liked it. Really. But we just don’t have the bandwidth right now.
6. We don’t do deals we can’t drive to.
5. Come back when you have a lead investor.
4. Absolutely, we know top people at Google and Yahoo well.
3. Absolutely, we know people at Sequoia and KP well.
2. We love your CEO.
1. I liked it, but I couldn’t get it past my asshole partners.

[Update] A few people has asked for a little more context on some of the above. Most of them are self-explanatory, but I’ll add to a couple.

10 — It is a stretch to say you’re all on the same side. Granted, if things are great then you all get wildly rich, but VCs can make some money on deals that make founders nothing.

8 — VCs often use this one as a crutch, even if the reality is they never say never to anything.

6 — One of the biggest lies out there. There are virtually no VCs so geographically specific anymore, but that doesn’t stop people from using this as an excuse. As I told Brad yesterday, I recently had a Sand Hill VC say the preceding about an East Bay deal. Guess they don’t like bridges.

5 — We never say what we’ll do when you do come back.

2 — This is a fave, and is usually followed by firing the CEO post-close.

1 — An all-time fave. It lets you say no, blame someone else, and still come across as a great guy. A complete lie nine times out of ten.

[Update 2] I wasn’t going to dignify it by a post, and I’m not going to link to it, but a certain gossip site on the web has made a false and highly offensive allegation about the origins of this post. I’m open to ideas what to do about it, because courting controversy is one thing, but making this sort of false allegation in public is something else. Ideas anyone?

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  4. A Dark (Economic) Year Lies Ahead
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Comments

  1. Having been in a few VC meetings recently, I can attest that this is true. Sure made me laugh, especially the Google and Yahoo one. One VC kept repeating it over and over again.

  2. I like it — now you can get a quick reply from a VC: “you’re a 7-6-4, don’t call us anymore”.
    On a serious note, the lack of actionable information from VC meetings makes it tough on entrepreneurs — most of whom know what they have to do to make their business successful, but because of the opacity of the VC process, aren’t quite sure how to position their opportunity for funding.
    So, what if entrepreneurs were able to post business plan summaries (anonymously and maybe redacted a bit) to a vetted volunteer network of former entrepreneurs, venture capitalists, angels, etc. — not for the purposes of securing funding, but just to save the time and energy of getting VC meetings, pitching and getting little feedback?
    So, it would be a Hot-or-Not for business plans with a quick ranking over a number of attributes plus room for comments, referrals, etc. Would be a good pre-cursor to a road show, or even hard evidence that the team should spend more time on the plan and the business and less time looking for funding.
    Relies on the goodwill of the industry, since it’s not a business model (at least I don’t think so), but it would be a valuable service to all.

  3. anon says:

    Spoken straight from the horses mouth.

  4. wired says:

    Straight to the point. Maybe some explanations whould have been useful.

  5. Funny!
    A alternate set of “top 10 lies of VCs” (from Guy Kawasaki) can be found here:
    http://www.slideshare.net/huer1278ft/top-10-lies-of-venture-capitalists/
    The lies are mostly different (1 and 5 are roughly similar). VCs lie so much, they need TWO top 10 lists!

  6. MRM says:

    Can it be called an “alternate” set if half of them are the same?
    http://www.wellingtonfund.com/blog/2007/04/18/paul-kedrosky-reads-blogs/

  7. /pd says:

    Let it slide.. no biggie. maybe all VC minds think the same.
    There is no way you can prove that they are *NOT* similar to Guy K’s !

  8. /pd — Maybe that’s the best thing. The original source for this ill-thought stuff has already revised and toned-down his unfounded allegation.

  9. Eric Robison says:

    In all fairness, there should be a list of lies as told by companies.
    10. We’re looking for a partner that brings more than money.
    9. We’ve been told that we were undervalued during our A round.
    8. We’re only looking at XXXX type VCs
    7. We really like your firm but we’re not looking for funding at this time.
    6. We only want to work with VCs that we can drive to.
    5. We’ve been talking to Sequoia and KP.
    4. We’ve been talking to Google and Yahoo.
    3. Did we say that KP is about to invest?
    2. We love your team!
    1. We liked your terms but we couldn’t get it past our board.

  10. MRM says:

    I don’t think there is any denying the “allegation” that this particular Top 10 “VC Lies” list isn’t unique material. That half of the list is the same makes it worthy of comment.
    Had David Letterman done a Top 10 list weeks after Jay Leno had done the same Top Ten list — replete with the same jokes — he’d be accused of either 1) a lack of originality, or 2) borrowing without attribution.
    It is a fact that this list isn’t unique, and that half of the ideas overlap with others of the genre.
    MRM

  11. You’re wrong Mark, and your analogy is flawed.
    It might be more appropriate if both Letterman and Leno regularly used Top Ten lists, and both independently did year-apart ones about the most popular criticisms of Britney Spears’ haircut, thus inevitably touching on some of the same cliched material. And viewed through that prism, you may — or may not — see how wrong your analogy is.
    Nevertheless, I’m not interested in hosting further discussion on the subject, nor on your ill-considered post that started this nonsense, so this post is closed.