I initially read this post because of Stanley Bing and the humor usually involved. The post ended up actually not being funny......no big deal. What peeves me though was one of the comments. You see this often in regards to statements about venture capital. The VC gives entrepreneur money, screws him, makes a lot of money for himself and the entrepreneur is left holding the bag without anything. This is getting so old and tired!
Whoever said you have to take a VC's money? Every entrepreneur who was ever venture funded made the decision to do so. As VC's, we don't wander around in packs looking for start-ups to force feed with our money in the hopes of skinning them down the road. (Actually, here's how I do it!) Yes, there are plenty of assholes in the business as is the case in any industry. Yet, there are also many astute businessmen and good guys who add value and generally lead to lots of entrepreneurs becoming very rich. There's even a large number of former entrepreneurs now investing venture capital. They are redefining venture capital to some extent but I bet you their contracts aren't very different than most VC's. (See Andreessen and Horowitz!)
If you get screwed after making the decision to raise venture capital, it's probably because of one of the following points:
1. You negotiated poorly and have a really bad contract. Shame on you!There's plenty of lawyers, blogs, books, forums, conferences, etc. out there where you can educate yourself on necessary terms and how venture capital works.
2. You didn't perform. Shame on you again. It is not easy starting and growing a business. If you end up getting screwed because you weren't up to the task and then whine about it, I have very little sympathy for you. If you had a contract where you could easily be booted from your position and the company (plus you performed poorly) see number 1.
3. You picked the wrong business model or industry or technology or management or employees or region or lawyer or consultant, etc. You get the point. It's you who is running the company. This goes back to number 2 above. Again, things go wrong and very few ventures actually succeed. This is not the VC's fault. Yes, he should be trying to help you grow your business and avoid mistakes. If he is a good VC whom you picked for the right reasons, this will be the case. Refer to number 4 below.
4. You picked the wrong VC. I've written often that you should do just as much homework on who invests in your business as the VC does when writing checks. It's you who runs the company. See number 2 above.
5. You genuinely WERE screwed by the VC. Yes, this does happen. There are bad apples out there and there people trying to take advantage of their position. They are few and far between and you should do your research on whom you are going to work with. It can go wrong but this happens. Dust yourself off and move on.....or otherwise re-read number 2 above.