that's not a unicorn startup, this is a unicorn startup. The startup is growing too fast. No one can handle this. Now you have a unicorn startup with too much growth, and no one to control it. The startup can't hire the talent it needs. The founders (or the CEO) will get sick of dealing with hiring. They'll decide to get an experienced CEO in place to replace them. One of the CEO's friends has a startup that got acquired by Uber or Instacart...but doesn't want to do that sort of thing themselves. They ask about a board seat at their startup and give the CEO a recruiting advantage. The investor's friends don't invest, they just keep asking for a board seat. ------ pryelluw The VC is in it for profit only. They use companies they invest in as pawns to promote their name and brand. If you are a good salesperson or have personal relationships, you are usually okay. If not, you get screwed. Also, they try to make the company do everything they do. They want money to be made by default. I think the VC money creates a problem. If you have VC money, there is a chance you have a problem because VC money is needed to solve it. If you are a successful entrepreneur, you are probably better off with no VC money and money from your bank account or savings. What does a VC do for you? If you are a good CEO, they will look good because you made a huge success without them. (i.e. Zappos). If not, they look good for an exit. If you are a founder with VC, they are often called the CEO. That means they can create trouble, screw you and generally act like the evil geniuses they are. ------ chadash The best outcome is that the VC provides some experience or wisdom that's absolutely necessary to help the company succeed. For example, a VC can help you recruit the right employees, or give you a perspective on some of the things that will be hard. But, usually, that's not the case. Most of the time, a VC is there to get a return on investment. Unfortunately, some investors don't know how to invest well, and they're just using the founders' innovations as a tool for their investment returns. A related problem is that VCs like to hire people like themselves, and those people are often not good at recognizing the weaknesses of the founders. You may be a great founder, but you might have a terrible cofounder. Maybe your cofounder is a great engineer but a terrible marketer or salesperson. You need a VC who knows how to look past the founder's strengths and see their weaknesses. Finally, VCs often don't have a plan. They just take the first idea they arrive at and apply the same approach to future ideas, regardless of whether or not the first one was successful. ------ ryandvm You have to remember that VCs aren't usually founders. They don't know shit about what it takes to run a successful startup and they're not invested in the idea, only in the exit. They're always thinking ahead, "What's in it for us?" If the answer isn't an IPO or a huge sale or whatever, the VC is out before they're fired. If you think VCs are bad from the start, you should have been a VC. ------ s3nnyy If you can't say no to a VC, you do not want to be one. VC money ruins you. You should not have a VC-relationship if you are not VC-funded. ------ m52go They don't know anything. They often have no idea how to execute a business, have never been in one, and are likely not that successful outside of VC themselves (which makes them believe they can replicate success without necessarily knowing anything about the actual industry or product). There's no way they can be "good" for a startup, let alone the "best". In sum: they're like investors in stocks. They just don't know how to run a business, and they're not really knowledgeable. ------ danvoell I'm not sure if this can apply to everyone but my theory is that the VCs look for founders with a track record. If the VC gets burned twice they tend to stick to founders they have worked with in the past. But that also means if you get the VC's attention you must have tried to raise funds before, have a track record, and be currently working on your second startup. Also, the VC has worked with a couple VCs in the past. Therefore they try to stick to them if they are already in the market for the next fund. You're going to run into it with a lot of VCs that only go with a single firm. ------ matt_the_bass I think the problem with most VCs is that they want to own a huge percentage of the company when it’s successful. They want there to be value left for them to buy when it’s not. They also want to cash out on the money invested quickly and not hold any of that investment for 5 or 10 years. So you end up with a situation like Google or Amazon where huge salaries are the norm and the founders own very little of the companies they started. I can totally understand the founders wants to be rewarded appropriately for their contribution and risk. But as VCs become more enamored with their image they aren’t necessarily as focused on that. ------ s0l1dsnak3123 They have a finite pool of capital to invest, with a limited number of people in it. They need to know where to spend it and when. "You need them" is not a sustainable model for a company. Your team is an engine for your company's success, not your business. Your team should be able to create new value through their talents without you having to micromanage them, and you should be making decisions that benefit them and the company. VCs have to provide more value than they take in order to be worth investing in. So you have to be really careful to figure out how they're going to help. The best thing is not to overinvest in them, as overinvesting means they can't do their jobs well. ------ kamaal A lot of points have been made in comments. One thing I'd like to add, from my perspective there are only 4 kinds of VCs. And I've worked with most of them. 1\. The first ones when I started, and then some others, they were actually very good guys. I mean to them 'The VC' did not mean 'someone who will screw you out of your money'. Rather it was more like 'The VC', is the one who is going to do all the work in the ground for you, so you can be the 'CEO' and your job was to do all the administration things. In that world when you work with a VC you will be getting a very big amount of shares for a very small capital, or you will be getting a few companies in your hand for a very small amount of money. Basically they had invested in a lot of startups during that time, so they were very familiar with what happened, they understood failure cases and stuff. And so whatever they do, they do it pretty well. These guys had a great reputation, they didn't screw things and as such they were attractive to investors. They would not screw you over, and they would give you the capital you need for things like marketing to be done, and they will provide guidance for things like hiring good employees etc. Basically as long as you deliver you would be able to grow your company. 2\. Somewhere mid 2000s they went from being bad to being worse. Most of them weren't bad guys when they first started, but pretty soon things changed. You had a situation where the bad guys went from a group of nice guys to being mostly assholes. They changed their approach. So for example instead of investing money they would rather become board members,