The majority of VCs aren’t in a position to offer decent advice to startups. In fact, most of them probably hurt startups, says Vinod Khosla of Khosla Ventures.
>>Read and Watch His Interview with Tech Crunch
And according to a recent post by Dilip Rao in Forbes: …even with all their strict criteria for selecting ventures, VCs succeed very rarely, Howard Anderson, a former VC, notes that the “common wisdom” in the VC industry is that of every 100 ventures financed, 20 are total write offs, 20 are losers, 40 are in the middle and 20 are winners. Noted author Gary Hamel estimates that out of 10 venture investments, “five will be total write offs, three will be modest successes, one will double the initial investment (19% internal rate of return per year (IRR) if exited in four years and 15% if in five years), and one will return 50 to 100 times the investment” (at 50 times, IRR is 166% if the exit is in four years and 119% if in five)…
So start-ups and entrepreneurs, tread carefully! Or, as a long time friend and former VC recommends: Do your own due diligence on prospective VC’s just as they do their due diligence on your start-up.