Wishing all the readers a very happy friendship day.This week is marked as friendship week, so this post is all about analyzing VC and entrepreneur relationship. Can VC and entreprenur be friends? it’s a little tricky question and don’t have straight answer for it.
Let’s investigate few scenarios -
a) There is no guarantee that VC will invest in company which is run by his/her entrepreneur friend. One instance its worth mentioning here is a prominent VC based out of Bangalore had long discussion with entrepreneur friend who runs a prominent F&B chain. VC didn’t find the value in that deal and was convinced exit won’t be easy with 7x-10x kind of returns. Running a 8-10 fast food chain has different kind of problems than running 80-100 fast food centers.
b) There are instances where entreprenuers have become good friends with on boards VCs just be their sheer execution capability, and entrepreneur have become Partner in the same VC firm after successful exit. Mark Suster became general partner at GRP partners after successful exit of his venture backed by GRP partners.
c) Sometimes founder can be displaced out of the company day today’s operation if VCs perceive founder is thinking VC money as his/her own money and performance of the company is quite mediocre. Entrepreneur founder is always in a impression that they are indispensable which is a big mistake they commit.