…albeit I haven’t said it nearly as well as well as Georges van Hoegaerden over at Venture Company.

I’ve been saying, by the time many venture funded startups have gone through their rounds of funding, even the founders are lucky to make any money. And that’s in the rare case that they actually make it to a reasonable exit:

“This alternatively funded CEO describes other CEO’s that seek VC funding as idiots – with a 1 in a 1000 shot at a lousy valuation (52% Round A, 25% Round B and 15% Round C). He continues that many of the serial entrepreneurs trumpeted by VC’s have no money themselves despite “successful” previous exits.”

and

“Great entrepreneurs are known for their passion to pursue their dreams at virtually any cost, and sub-prime VCs smell their blood and desperation. Those companies become owned by VCs quickly and because of the investors’ lack of relevant operating experience yields a further deflation of the valuation of the company. We’ve seen many companies with end-game founder stock way below 5%, which is unlikely to become life-changing. So, why would you take the scrutiny of the CEO job with that outcome in mind? ”

I’ve been saying, almost every entrepreneur I meet who has left a big company tells me they want to work for themselves. And yet, the first thing they do is go and find a new boss at a venture fund. What’s so funny to me, is that especially in Seattle, some of the partners at venture funds are the very same big company execs that these entrepreneurs left BigCo to avoid.

“The powers of the CEO are further restricted by clauses on expenditures in either the articles of incorporation, termsheets, voting rights or other legal documents. We’ve seen restrictions requiring board approval for expenditures as little as $5,000. That means a CEO can’t make pressing decisions until a next board meeting or when there is an ability to call an impromptu session. These restrictions are further evidence that a CEO does not have the trust of the board. “

and

“Many VCs do not have the credentials and relevant operating experience to lead an experienced CEO. Yet it behooves the CEO to listen to the idiosyncrasies of the VC in order for them to endorse a CEO’s leadership. Nothing is worse for a company’s future than having to wait for the investor to validate every step along the way.”

Lest I be mistaken for an anti-VC guy, I am not. If JFM ever had a project that needed funding and had goals that were aligned with the VC business model, we would pursue that type of funding.I have no doubt there are smart and talented folks in VC who add real value to the startup ecosystem, give their CEOs room to make mistakes and grow, and are doing their best to help each of their companies succeed. That said, often, even these quality folks have goals that are simply not aligned with those of the founders (and the employees) of their startups.

What bothers me is that many entrepreneurs I talk to seem to be oblivious to the realities of how VCs make their money and how that often (but not always) misaligns the CEO and the VC. I did talk to one CEO who described the startup funding process as follows:

“I go around to dozens of venture capitalists asking them if they’re interested in buying my company, and oh btw… may I have a job there once you own it?”

He was kidding a little bit, but he was also not kidding at all.I think if more entrepreneurs had a realistic attitude about their relationship with VCs we’d see a lot better group of venture funded tech startups. And who knows, maybe Georges van Hoegaerden will succeed in his new mission: “In the meantime I’ll do my best to help fund-managers revive Venture Capital. It is about time the fund-managers hear the entrepreneur’s point of view. That has become my new mission. ” Good luck Georges!