The Paradox Of VC Seed Investing

Editor's note: Brian Singerman is a partner at Founders Fund and previously worked at Google and There.? This is the first in a series of articles I am writing to bring more transparency and honesty to the field of venture capital. While many of the themes may be contrarian or controversial, I have two primary goals: First, I want to help entrepreneurs and startup enthusiasts understand what motivates investors. Second, I hope to draw attention to some of the fallacies venture capitalists use in their negotiations with entrepreneurs. Aligning the incentives of entrepreneurs and VCs will lead to much stronger relationships and innovation. Entrepreneurs regularly come to Founders Fund asking us to lead or participate in their seed/angel round. They are often confused or shocked when I try to convince them that with very few exceptions, it is not in entrepreneurs? best interest to raise seed capital from large venture firms and neither is it beneficial for large firms to invest in seed stage companies. Among the reasons: the structure of VC economics and unavoidable perception issues. Since this conversation happens frequently, I?d like to share my honest thoughts on why large funds should avoid angel investing -?? and also why Founders Fund nevertheless does so through its wholly owned FF Angel funds.

Source: http://feedproxy.google.com/~r/Techcrunch/~3/k9thb17zERw/

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