Is life as rosy as you think for venture capitalists? Is “vulture” capitalist even a fair or accurate cutdown? Emotions run hot on the topic out here. In Silicon Valley, the VC megabanks that risk millions on startups are often reviled — for a variety of reasons.
Check out this parody video created by some VCs at Foundry.
Toss a stick and you’ll easily hit a bitter startup vet who says the price of taking venture capital Series A funding is tantamount to career and even eventual startup suicide. Out here, the average startup guy is pretty danged wary of the so-called vultures.
The fear is that a greedy VC will promise the moon but, in the end, just offer draconian terms in exchange for too much cash and too little equity at the end. And anyway, how much is getting screamed at in board meetings really worth? Another common fear — one not at all unfounded — is that young CEOs sometimes lose their jobs to some “entrepreneur in residence” the VC thinks could do the job better. Yikes!
Yet not everyone gets stiffed. These are stereotypes — and with all stereotypes, you get a grain of truth and miss the big pic. Venture firm Accel Partners, for instance, owns a handy dandy chunk of Facebook (Nasdaq: FB) right now — it is an enormous stockholder at this point. Facebook likely isn’t too sad about that — and Zuckerberg, 28, does still have his (corporate) head.
VCs played a critical role in building up the tech biz. Without the first VCs, firms like Intel and Apple would’ve been unlikely to get off the ground. You can see how ownership of FB shook out in this infographic.
It’s absurd to say all VCs — or all lawyers and cable companies, for that matter — are bad people. Raising money is tough — and so is investing in winners. The Foundry Group, an early stage investment company, poke a little fun at the stereotype they live with in this parody video at top. It’s brilliant, I say, because it rings so true. It sure shows the good, the bad and the ugly — VC-wise.
On its posted video, reps from Foundry wrote:
Foundry Group, a venture capital firm investing in seed and early stage US-based technology companies, launched this documentary film illustrating through complex metaphors and stunning montages the secret lives of venture capitalists including information rarely seen or understood…until now.
The film entitled “I’m a VC” is an in-depth, hard-hitting, and emotionally charged look into the lives of four veteran venture capitalists trying to make the world a better place. Starring Foundry Group Managing Directors Seth Levine, Ryan McIntyre, Brad Feld, and Jason Mendelson, the film gives insight into the VC ecosystem that the public has never seen before. VCs deal with many difficult issues on a regular basis that few know about, including what to eat for lunch, competing with friends and family for deal flow, and feeling insecure about their choice of college education…
Not all VCs are out to shake you down. Nothing is that binary. I mean, there are VCs, angel investors and private equity firms who only invest in companies in line with social causes and still others who vow to help and train — rather than dilute and drown — young founding members of a startup team in favor of their own entrepreneurs in residence. Accel, for instance, has a great reputation for the latter as Mark Zuckerberg, 28, learned for himself. He still owns a majority stake in Facebook.
Here’s another Cinderella story to that point: Apple chair and CEO Steve Wozniak, in his book iWOZ: How I Invented the Personal Computer and Had Fun Doing It, said he and Steve Jobs were near giving up on funding their tiny Apple startup in 1975 when 30-something Intel retiree and nascent VC Mike Markkula came in to save the day. Markkula gave the two Steves the money they needed to build Wozniak’s Apple ][ and distribute it, advising the young partners on a host of matters and helping them staff up.
Before that, they’d been rejected well over a dozen times.
Disclosure: The editorial director of this site, Gina Smith, co-wrote iWOZ (W.W. Norton 2007), a memoir penned by Steve Wozniak with journalist Smith. Smith profits financially from that book’s sales.