Don’t Take Money from VCs Until You’ve Asked 4 Questions

In the race to get the check in hand, most entrepreneurs don’t do in-depth due diligence — or any due diligence — on the venture capital (VC) firms they pitch. Founding teams eager to raise capital to grow their companies enter into long-term partnerships with VC firms they don’t know well. It’s a risky strategy that can leave startup CEOs in mis-aligned partnerships with unrealistic expectations.

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Six Myths About Venture Capitalists

Steve Jobs, Mark Zuckerberg, Sergey Brin: We celebrate these entrepreneurs for their successes, and often equally extol the venture capitalists who backed their start-ups and share in their glory. Well-known VC firms such as Kleiner Perkins and Sequoia have cultivated a branded mystique around their ability to find and finance the most successful young companies. Forbes identifies the top individual VCs on its Midas List, implicitly crediting them with a mythical magic touch for investing. The story of venture capital appears to be a compelling narrative of bold investments and excess returns…

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The Three Myths of Venture Capital

In the Kauffman Foundation’s recent report “We Have Met the Enemy…and He is Us,” we present the disappointing returns generated from the Foundation’s venture capital portfolio. Like many other foundations, endowments and pension funds, Kauffman’s investments in venture capital have, for more than a decade, persistently failed to generate the promised “venture rate of return” of at least two times our capital invested, after fees and carry.

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