The VC Thought Process

Now that my father has passed away, I get to hear some pretty interesting stories from his friends that he would never tell me when I was younger.

As a lawyer he would meet with a lot of various people…. Here is a memorable quote from a trip to Boston to meet with a Venture Capital firm:

“You see what we do is we know a start-up needs 10 million dollars. So we give them 5 million because we know in a year they will be back again and we will give them another 5. This way instead of owning 20% of the company in two years, we own 20% in one and own 50% in two. Pretty soon we own the entire company.”
- Venture Capitalist

“That sounds exactly like what the mob does!”
- My Father

Thoughts? In the start-up world we laugh at this, but really — this is the reality.  If you can’t boot-strap then you give into men who wear suits.

This entry was posted by Nicholas Abramovic on Friday, May 15th, 2009 at 1:49 am and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a thought provoking comment, or trackback from your own site.

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One Response to “The VC Thought Process”

  1. Dennis Yu Says:
    May 15th, 2009 at 5:05 am

    Shame on the entrepreneurs who take this money– if you can stop losing money, you won’t need the VC’s.

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