The VC Field Guide

12Notes for Entrepreneurs: Some Thoughts

If you're looking from the outside in—you're an entrepreneur and you're ready to go get your first round of funding—the VC world can be intimidating. Hopefully this book will be a valuable tool in your arsenal, and you'll be able to walk people through the framework and land your financing. But I wanted to provide some nuances that can be helpful to entrepreneurs because as an entrepreneur, you need to go into it with an understanding of the overall strategy of the venture capital firm. Are you joining a family where you are one of 10 startups or are you joining a family where you're one of 100 startups? There is nothing wrong with either “family” and both of them make a ton of sense, but you just have to be very cognizant of what style of an investor you're talking to first. If you are an entrepreneur pitching to a VC where you're going to be in a cohort of 100, there is a lot of recognition by that VC firm that you might be a failure in the end for them. It will be okay for the VC because that VC has lots of other options, while you as the entrepreneur do not have many options.

The flip side in exchange for that higher risk that you take for working with a VC that has lots of startups in their portfolio is that they usually give you more room to run. They usually will give you more money or a higher valuation, but you are on your own. The other VC firm, where you are one of 10 startups, you know you are with a firm that wants to make ...