Hilarious Video Making Fun of Venture Capitalists | Totally Sending the Wrong Message

We came across this video and I have to admit it’s hilarious! In only 3.5 minutes, they’ve managed to poke fun at about 15 things that investors do that annoy entrepreneurs. I’m pretty impressed with the entertainment value, but I have to take issue with the overall message this is sending. I think THIS VIDEO IS PERPETUATING STEREOTYPES THAT HARM ENTREPRENEURS AND INVESTORS and here’s just a few reasons why it’s not helpful:

I think this video perpetuates many investor stereotypes, but these are the three I’d really like to take issue with:

  1. Investors ask for different pitch formats to waste entrepreneurs time. Investors do often ask for different pitch formats and it can be very time consuming for entrepreneurs. Unfortunately however, investors are individuals and individuals process information in different ways. I can’t speak for all investors, but we ask for information in a format that is in line with our learning style and will help us understand the business as quickly as possible. This should be a win for both parties. I am taking issue with this because I often speak to investors (and I admit I’ve done this too) who don’t ask their important questions because they don’t want to bother the entrepreneur. This can certainly come back to bite both parties. To avoid major future problems, both parties need to fully understand what they are getting into and while this may take more time from the entrepreneur in the short run, it will solve a lot of problems in the long run.
  2. Investors are out to steal your ideas. In the video, the VCs bring in an EIR (Entrepreneur-in-Residence) with a competing company to watch the pitch. I don’t know every investor, but I don’t know any investor who would do this. In fact, I have found that most investors are over-sensitive about potential conflicts of interest and always disclose them to entrepreneurs. Because of this stereotype however, many entrepreneurs are hyper-sensitive about their confidentiality and this often puts the entrepreneur at a disadvantage. It is certainly important for entrepreneurs to be careful, but entrepreneurs who ask for NDAs at the first or second meeting or refuse to share a basic summary of their business are often seen as inexperienced by investors. Most investors I know understand two very important things 1) If they do shady things like breach  confidentiality or fail to disclose conflicts of interest, they will be shamed by the investor community and 2) if an entrepreneur is afraid that sharing their basic idea will prevent them from beating their competition, they must not have much to invest in.
  3. Investors are like sheep who just follow the interest of others.  In the video, the VCs are totally uninterested until they hear that Larry Page (Google co-founder) is interested. Yes, most investors do follow the interest of others, but it’s not because they are sheep, it’s actually a pretty smart strategy. Take the Impact Angel Group for instance. We had 522 requests for funding last year. There is no possible way we could have dug deeply into all 522 of those. We can only afford to take a really deep look at about 1% of the opportunities we look at, but we can invest in more if we have a trusted network of people who are also taking a deep look at 1% of their opportunities. Brad Feld calls this “qualified reference checking” and its a great way for investors to increase their efficiency and hence, invest in more companies.

Why am I taking issue with this video? In summary, entrepreneurs who believe these stereotypes can be viewed as inexperienced by investors. Investors who are afraid of being seen as a stereotypical VC like the guys in the video, are often afraid to ask questions and take the steps needed to prevent major future problems for both investors and entrepreneurs.

So…to the producers of this video, thanks for the 3.5 minutes of entertainment, but please channel your brilliant creativity into something other than perpetuating a stereotype.

What do you think?

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3 Responses to Hilarious Video Making Fun of Venture Capitalists | Totally Sending the Wrong Message

  1. Sunil Malhotra says:

    Elizabeth, for you to have taken the time and effort to explain shows that not all VCs are what they’re made out to be. However the video does prove that the sentiment around investors isn’t very positive when looked at from Entrepreneurs’ lenses — no smoke without fire. What you say is probably true of the ‘ethical + competent’ investors but sadly that doesn’t seem to be the rule here. Speaking for myself, here in India it’s mostly what I see in the video that I see playing out. Too many sheep.

    • Elizabeth Kraus says:

      Sunil, thanks so much for your thoughts! As I said I don’t know all investors, so this may be true for some, however, it really puts those who aren’t like that (all of the investors I know) at a disadvantage. Thanks for your comments!

  2. If there wasn’t some truth in it, the video wouldn’t be funny.

    Stereotypes that are accepted as truth by the uniformed and intellectually lazy can be damaging at the macro level, but at the micro level I don’t think matter very much. In other words, someone you meet in a grocery store may think your work is the equivalent of clubbing baby seals to death, but I don’t think quality opportunities are suddenly going to stop being funded by quality capital.

    Personally, I have heard over and over how hedge funds are the reason why markets go down, but somehow they never get any credit when the markets are up. Huh? Neither are correct, but people want to believe the former because a mono-causality sound byte is so much easier than real research.

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