Small Biz Watch: Venture-capitalist lies
By James Pethokoukis
Posted 1/10/06
Guy Kawasaki is a managing director of venture-capital firm Garage Technology Ventures and former chief evangelist at Apple Computer during the rise of the Macintosh. On his fascinating blog, Let the Good Times Roll, he writes about the "lies" that venture capitalists tell entrepreneurs. Here are a few of them:
- "I liked your company, but my partners didn't." Kawaski says that's just a good cop/bad cop routine when one of the VC guys doesn't want to be blamed as the entrepreneur's dream killer. "This is a cop out; it's not the other partners didn't like the deal as much as the sponsor wasn't a true believer. A true believer would get it done.
- "We're investing in your team." Kawasaki says this is merely a reassuring statement to entrepreneurs that they won't lose control of their companies. But don't count on it. What that statement really means, according to Kawasaki, is that "we're investing in your team as long as things are going well, but if they go bad we will fire your a– because no one is indispensable."
- "I have lots of bandwidth to dedicate to your company." In other words, the venture capitalist has lots of time to devote to your firm. But that's a bad assumption, Kawasaki says. "Counting board meetings, an entrepreneur should assume that a venture capitalist will spend between five to 10 hours a month on a company. That's it. Deal with it. And make board meetings short!"