VC Cliché of the Week
In Hang Fire, the second song on Tatoo You, the last really good Rolling Stones record (until Bigger Bang), Mick Jagger sings:
You know marrying money is a full time job. I don’t need the aggravation. I’m a lazy slob.
I have always loved that line and have used it many times over the years at work.
Marrying money is something the entrepreneur should do with great care. Dealing with investors shouldn’t be a full-time job but unfortunately is in many cases.
When you take money from a VC, it should be the beginning of a healthy partnership. The VC should not expect the entrepreneur to "work for them". The entrepreneur should not attempt to "manage the VC".
But all too often the exchange of money and stock that is the heart of a venture deal has the impact of changing the entrepreneur’s view of their role in the business. They begin to feel beholden to the VC. And many VCs like the entrepreneur to feel that way.
I like to think of the VC’s role differently. I have said in the past that the VC’s customer is the entrepreneur. Most high quality entrepreneurs have a number of options regarding who they take money from. In that situation, the VCs should be competing on the basis of which of them will be the best partner for the entrpreneur and the business. The exchange of money and stock should be the ties that bind, but the relationship should be a true partnership not some kind of heirarchichal structure.
The other time the entrepreneur marries money is when they sell the business. At that point, the VC is gone and the entrepreneur usually has to stick around for a year, two, or sometimes even longer to realize the full value of the deal.
Almost always when the company is sold, the entrepreneur stops being the boss and starts reporting to someone in the parent company. They have married money and it is a full time job. Their baby is someone else’s baby at that point and they have to figure out how to think about things differently. It can be a frustrating experience. But if the money is good, most of the time it’s the right thing to do.
The bottom line is that marrying money is something entrepreneurs should do carefully. Because it can be a full time job and the divorce can be painful if you pick the wrong partner.