Quora Question: What Are the Downsides of Being a Venture Capitalist?

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Answer from Patrick Mathieson, venture investor at Toba Capital:

Overall, working in venture capital is a really cool gig. But like anything else, there are some downsides:

  • You're always at least one step away from the action. I'll quote one of the anonymous answers below, which is really perceptive despite her/his claim to have never worked in VC: "Some VCs may feel more like an agent rather than a principal. VCs ultimately don't have their hands on the wheel, the entrepreneur does. VCs can come up with good ideas, persuade, inspire, cajole, or threaten but ultimately it is the entrepreneur (or hired replacement exec) who gets it done."
  • You represent a stereotype. You might be a really, really nice person—unpretentious, thoughtful, ego-less—and you should be, and that's great. But among some portion of the industry/public, when they hear the letters "VC," they're going to automatically assume you're a dick.
  • You sell a semi-undifferentiated product. Yes, value add, blah blah blah. Sure. But the most important thing you're selling—by far—is cash. Those entrepreneurs wouldn't trade away 25% of their company's equity just to see your friendly face at their board meetings.
  • Saying "no" sucks. Especially when you've taken up a lot of the entrepreneur's time prior to arriving at a final decision. We try to avoid this by "getting to a 'no'" as quickly as possible, but sometimes it does take a few weeks of work to realize the investment is not a great fit, and then delivering that negative answer is painful for both sides. (To be fair, causality also goes the other direction, and entrepreneurs sometimes decide to go with other firms instead of us. Which is fine, but can be disappointing.)
  • Many of your portfolio companies will fail. This sucks not just because everybody loses money, but moreso because the death of a company is painful, emotional, nerve-wracking, and just shitty overall. As owners/investors/partners in the business, we are active participants in the demise. It hurts to see great, inspiring entrepreneurs & their teams not achieve success.
  • Your skills are not necessarily transferable to other jobs. The others' answers have addressed this well, so I won't elaborate.
  • Your financial upside is indeterminate, far off in the future, and not always in your control. Yes, this can be a rather petty whine because VC salaries are generally very good, and because you could say the exact same thing (the previous sentence) about entrepreneurs and startup employees. But the truth is that ever earning carry (read: making serious, bigtime financial upside) is often dependent on whether the fund managed to invest in a 10x or 100x returning portfolio company, and often the difference between making and missing that investment is extraordinarily slim. There are a lot of "I was on my way to a meeting with this kid Mark Zuckerberg back in 2005 but then I got a flat tire and had to cancel" stories floating around the Valley. It can be maddening.

(To be clear, the only reason I'd ever enumerate the downsides of my job is to answer a question on Quora—oh, how I adore thee, sweet Quora. I wake up every morning extremely grateful for my career.)

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Quora Question: What Are the Downsides of Being a Venture Capitalist? | Business