HACKER Q&A
📣 andrewstuart

Why do VCS give business advice when all they provide is cash?


Why do VCS give business advice when all they provide is cash?


  👤 cratermoon Accepted Answer ✓
It's their money, they want a say in how it's spent, even if they have no idea what they are doing.

Non-profits have a similar issue with restricted giving from philanthropic donors. Instead of giving money to the charity and allowing them to use it for their purposes according to their expertise, the philanthropist gives with specific directions for the use of the funds. Most charities dislike and don't solicit these kinds of donations. Why give a lot of money to a charity you like unless you like it enough to let it decide how to spend it?

At least in the VC world, the people providing the money tend to have a claim to knowing how to run a business, and the recipients tend to have less experience in running successful companies.


👤 jilijeanlouis
Depends on your partner - 3 cases:

- Some are former operators / joined successful firms at very early stage and lived the growth and startup problems. Startups all have the same problems at different stages

- Some are former founders and lived the same problems

- Senior partners had seen patterns repeating in the same industry/vertical/geo as you and worked/were on board with the founder iterating to find what was working or not on the same problem that you have.

Worth listening and filtering taking advice from successful partners/former entrepreneur/early operators can gain you months of learning.


👤 pkoird
It's not just VCs. Everyone loves giving advice. Why, I'd hand out advices all day if anyone would listen!

👤 kidgorgeous
they ad to have got the cash in the first place, so they can tell the owners how to be profitable