Venture capital summed up

Every wonder why venture capitalists really aren’t interested in ‘early stage innovative companies’ (i.e., you)?

This gem of an explanation comes from Jerry Neumann‘s blog:

“If your venture fund didn’t invest in one of the most successful companies of your era you were not one of the top venture funds … So you try to invest in unicorns. The easy way to do this is to have the expertise, the network, and the reputation to be the one the founder chooses after it’s already obvious that they have a shot at the gold ring. It’s like betting on the sure thing but getting reasonable odds.”

People make the most money when they invest in a company that is already winning, i.e., the company that typically doesn’t need the investment. Making the most money is what VCs need to do, to survive. That’s why they act the way they do.