Times Were Bad, VCs Get Tough; Times Are Good, VCs Get Tough

from the yeah,-nice-try dept

After the bubble popped, many VCs practically stopped all investing. In the cases where they did invest, they often put in incredibly onerous terms that gave the VCs a lot more power than they might have deserved (though, some VCs will disagree with this). Of course, now that times are getting better, people are saying that VCs are tightening terms again - so as not to get burned. What this really means is that many VCs are looking for any reason to make the terms more in their favor. Times are bad? Terms need to be tighter. Times are good? Terms need to be tighter to make sure they don't go bad again. The obvious response, of course, is that it is the VC's job to get good terms - but if those terms cause more problems, it's a strategic mistake. If entrepreneurs feel that their VCs are ripping them off, it defeats much of the purpose of getting that VC money in the first place. Besides, as the startup market picks up again (as it's doing) this becomes less of an issue. Already, we hear stories about VCs offering ridiculous valuations to companies because they're in a "hot" space. When competition for the hot startups increases, VCs are suddenly willing to make the terms a bit more reasonable.

1 Comments | Leave a Comment..