Dan Shapiro uncovers some of the reasons why VCs act as they do:
VC behavior sometimes looks insane, but generally it’s just sound economics. It’s crazy but true: if you know how a VC gets paid, you can pretty much read their mind.
Key points covered:
- VCs don't want to take any risk
- They want you to take more money
- They raise big funds even though smaller ones perform better
- They're not interested in quick, profitable exits
- They'll block profitable sales
- They invest gregariously
Worth a good read to understand the economic incentives of (most) VC firms.