Andy Dunn, the author of the post I have linked below, is the founder of Bonobos. He writes endearingly scathing posts about his experience as a founder looking for capital.
Dear Dumb VC (Venture Capitalist) has created waves all over the venture community and has been hotly debated from both the sides of the investor, and the bruised and battered entrepreneur.
It’s a love letter (NOT!) from a successful entrepreneur to his erstwhile VC. There are lessons here for all of us that start companies or projects and weigh capital raise options.
It’s a departure from the rubbish they teach you in business school (Yes even in the best schools, they teach you rubbish about the real world!)
Let’s be clear on a couple of points first.
I dont’t believe VC’s are unintelligent per se.
They are more often than not highly educated and very well spoken.
I also don’t believe that all VC’s don’t understand business.
We should draw the distinction between VC’s who have built or worked in business before (Operating VC’s) and those that have not (Financial VC’s).
But most VC’s I have met have not been been operating VC’s. So called Financial VC’s, most certainly are less experienced about actual business concerns and in many cases are only looking to turn a quick profit regardless of the overall outcome for the business.
All VC’s prefer the moniker “Operating VC”. Of course they do. Wouldn’t you?
However, having worked in business development role in another persons company or having a career exclusively in consulting is NOT operating experience. Sister Please!
Flipping a business in a year or two is also not an “operating experience”. I don’t care what you say about it…I believe it takes time to build operating experience in a business. You may be successful as an entrepreneur if you sold your business quickly, but you don’t know operating from a hole in the ground.
A true Operating VC is worth her weight in Gold. If they are real OVC’s, you really shouldn’t care whether they want to invest in your company. Put them on your board, befriend them, do whatever it takes, but don’t ever let them go. They could be the difference between success and failure and more importantly knowledge and ignorance.
Enough of my opinion. Read and decide for yourself. It’s a very well written piece!