Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

The Majority Of VCs Harm Startups Says Leading Silicon Valley VC

Posted by Tom Foremski - September 11, 2013

Vinod Khosla is a veteran VC and a very successful one. He doesn't think much of other VCs reports  Kim-Mai Cutler: Vinod Khosla: 70-80% Of VCs Add Negative Value To Startups | TechCrunch.

Speaking on stage at Techcrunch Disrupt conference:

"Maybe some percentage that's substantially larger than 95 percent of VCs add zero value. I would bet that 70-80 percent add negative value to a startup in their advising."

He said that most VCs "haven't done shit" to know what to tell startups going through difficult times.

That's not going to go down well in the Sand Hill Road Gulag, where the VC community has an extraordinary belief in the power of "smart" money, yet can't beat an S&P 500 index fund over a decade of investing. It's not a good time to be a VC.

[10-Year Study Erases VC 'Smart Money' Claims -SVW]

The comments could come back and haunt him, since it will attract attention to Mr. Khosla's investments, particularly in clean tech, a sector that struggles to show the same kinds of scalable profits that web services and enterprise tech startups are able to achieve.

His Khosla Ventures fund features a celebrity "advisor" Tony Blair, the former British prime minister.

His "harmless" advice to startups is: "Founders should listen politely and just do what they want to do anyway."

Serial entrepreneurs already know that, but first timers don't and likely won't do that because they are too young, and  too naive. Plus, what's the point in VC investors if they can't provide any value beyond a checkbook? It's better to pursue alternate funding that doesn't require a board seat.

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