Venture capital has become increasingly ironic (instead of iconic…)
Having worked at a VC-backed startup, a top tech media company as a managing editor, and having founded a few companies, I have had the opportunity to interact with numerous venture capitalists (VCs).
Very few of them are genuinely passionate about taking a long-term perspective and being aligned with the startup's vision and values, the majority of VCs are driven by hype and market trends, leading them to overgeneralize and make inaccurate predictions.
So startup founders should avoid blindly listening to VCs' predictions and market analyses, which may be short-sighted. Instead, you need to stay focused on building a strong, long-term business with a solid value proposition and sustainable model.
If you need VC $, you should seek out VC partners who are truly aligned with your long-term vision and values, rather than those just chasing the latest trends.
Building sustainable businesses requires patience and persistence, not reacting to every shift in investor sentiment. You will need backers who support their multi-year vision, not quarterly projections.
- They congratulate each other on raises, promotions, deals, making it to the "30 under 30," or being on the Midas list... but none of it matters when it comes to whether your company will be successful or not.
- They need Grand Slam returns, but they only care about their own career ladder: getting promoted to GP, raising a new fund, or being hired by a Forbes 500 company as VP+ (before having true return).
- Most VCs are wrong most of the time, and most importantly, they have never been hugely right before (gotten huge returns).
- Most of them don't have successful investments, yet almost all of them constantly tweet about trends and pitch all the time. (to get dealflow, network)
- VCs mention "Enduring Company" in their memos, but they are more than happy to sell their shares in the secondary market.
- VCs tweet about trends all the time to prove they have an over-hyped deal flow so they can raise a new fund. However, it doesn't necessarily mean it's a good category to build products in or that the market truly exists.
- Most VCs will dump you when you are no longer "the signal" for new funds or deal flow.
- VC feedback cycles are longer than builders' feedback cycles.
- VCs often prioritize short-term gains and quick returns over long-term sustainability and growth.
- They follow market hypes so they can raise new funds.
- The VC can tell you to grow at all costs to dominate the market this year, then force you to turn profitable the next year when the market shifts.
- Great VCs invest based on potential, not just current traction. The hype cycle inevitably moves faster than real adoption. Take a long view and don't chase trends.