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September 23, 2007
Venture Capital: A "Contraindication of Success"?
Entertainingly contradictory musings from billionaire (and new VC) Randal Kirk on the venture capital business:If you like something, you should want more of it, and if you don't like it, you should get rid of it. [His company] never traded equity for VC dollars, nor would Kirk have let it. The presence of a venture capitalist behind a startup is, he says, "a contraindication of success.[via Forbes]
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Hmmmm.
Well, in the context of the universe of VC funds having earned average pre-fee risk-adjusted returns below cost-of-capital (over a reasonably long time horizon), there may be an empirical case available. Just not sure that the universe of "start-ups" has on average done better....
Would looking like your VC help? I am referring to this advice: http://smartstartup.typepad.com/my_weblog/2007/09/secrets-of-rais.html
Is this hot on the east coast too?
I have worked for several VC-backed startups, including those backed by some of the big ones: two Kleiners and a Sequoia. As far as I can see, there is no relation between the VC firm and company success. The VC board members don't really do anything to help you out anyway. Of the four, the only one that made any money for the employees was backed by smaller firms. Any time I hear someone tell me "well, it's backed by Sequoia" I have to laugh and think that this person must be new to the startup game.