Quora Q&A
Why do people tend to think that VCs are arrogant?
J-David Chamboredon
Because a VC firm funds only a very tiny percentage of the projects it gets pitched by and because a large majority of projects having tried to raise money is not funded by any VC firm, the VC community which says “no” so often is naturally considered as arrogant.
Post-investment, some VCs are actually arrogant and some aren’t at all but this assessment is reserved to the funded guys and concerns only the individual VC backers they have convinced to get on board !
I often compare the post-investment role of a VC to a professional golf caddy. No particular reason to be arrogant in this supporting role but some good reasons not to accept to be the caddie of a guy who has no chance to win ever any big competition !
Truthfully, I think VCs have this reputation as a group because it’s unfortunately true in a number of cases. There are a lot of VCs that mistake their role as a buyer in the equity market for startups with superior judgment or knowledge. A good VC recognizes that just because s/he is constantly on the receiving end of pitches it doesn’t mean that the VC actually knows more than the entrepreneurs on the other side of the table. Quite the contrary.
And that’s the fundamental tension of the VC business – it is literally the job to exercise judgment about which companies one thinks will make good investments, but at the same time it is usually true that we have the last specific knowledge about a particular business. Thus an intellectually curious humility is the only way to do the job properly. This is part of why being a (good) VC is harder than it looks.
When we raised our last round of financing, we met and spoke to more than 20 investors – VCs, seed funds, and so-called super angels. I can honestly say that I did not find a single one to be arrogant. I went into the process with a lot of misconceptions and was also under the impression that many VCs are arrogant. However, reality was very different from perception, so I’d encourage entrepreneurs to go in without these preconceived ideas and base opions on their actual experience. In our case, we found every single investor to be respectful, intelligent (to varying degrees) and willing to help and learn about our business.
VCs are in a rarified position to play God with entrepreneur’s ideas and their companies. This is a very personal interaction to the entrepreneur and a business deal to the VC. The proverbial telling someone their baby is ugly.
This disconnect can cause VCs to seem arrogant when in reality they are being dispassionately realistic. Remember they owe their LPs a certain return and no matter how much they love an entrepreneur or an idea, they ultimately owe their LP’s good business analysis.
I would add the VCs i have interacted with have all been pretty good to great. The image of an arrogant VC tearing apart an entrepreneur’s idea is something I have heard of and never seen.
