Comments on: Who Is The Venture Capitalist’s Customer? http://larrycheng.com/2009/09/27/who-is-the-venture-capitalists-customer/ Some thoughts on VC, some on tech, and some on other stuff. Thu, 17 May 2012 23:16:10 +0000 hourly 1 http://wordpress.com/ By: Pete http://larrycheng.com/2009/09/27/who-is-the-venture-capitalists-customer/#comment-971 Mon, 28 Sep 2009 22:45:10 +0000 http://larrycheng.wordpress.com/2009/09/27/who-is-the-venture-capitalists-customer/#comment-971 The VC’s customer is the LP, just like a stock broker’s customer is the retail client. Both VCs and stock brokers buy stock for their clients. The structures are completely different, but the intent and results are similar.

If you own it, then it’s not your customer. Customers have to be able to walk away, by definition.

I agree with you Larry that a VC/entrepreneur relationship is closer to a partnership, but given the preferences and rights in a typical VC deal, it’s a lopsided partnership.

Pete

]]> By: Larry http://larrycheng.com/2009/09/27/who-is-the-venture-capitalists-customer/#comment-969 Mon, 28 Sep 2009 13:49:05 +0000 http://larrycheng.wordpress.com/2009/09/27/who-is-the-venture-capitalists-customer/#comment-969 Have you gotten any VC responses? (offline, off-twitter etc.)
I’m interested to hear the other point of view.

I’m in your boat that the VC’s customer is the LP, it’s true in other private equity business models as well.

]]> By: Cem Sertoglu http://larrycheng.com/2009/09/27/who-is-the-venture-capitalists-customer/#comment-968 Mon, 28 Sep 2009 13:48:04 +0000 http://larrycheng.wordpress.com/2009/09/27/who-is-the-venture-capitalists-customer/#comment-968 I think the entrepreneurs are the customers, the LPs are shareholders and the investment & monitoring processes are the services. the VC is a service organization, not very different than a strategy consultancies…

]]> By: Twitter Trackbacks for Who Is The Venture Capitalist’s Customer? « Thinking About Thinking [larrycheng.com] on Topsy.com http://larrycheng.com/2009/09/27/who-is-the-venture-capitalists-customer/#comment-967 Sun, 27 Sep 2009 23:19:27 +0000 http://larrycheng.wordpress.com/2009/09/27/who-is-the-venture-capitalists-customer/#comment-967 [...] Who Is The Venture Capitalist’s Customer? « Thinking About Thinking larrycheng.com/2009/09/27/who-is-the-venture-capitalists-customer – view page – cached Posted in Economy, Philosophy, Venture Capital by larrycheng on September 27, 2009 — From the page [...]

]]> By: Sean Murphy http://larrycheng.com/2009/09/27/who-is-the-venture-capitalists-customer/#comment-966 Sun, 27 Sep 2009 21:04:03 +0000 http://larrycheng.wordpress.com/2009/09/27/who-is-the-venture-capitalists-customer/#comment-966 The best analogy I see is to publishing. Authors are not the customers for a publisher, the public–by way of booksellers and distributors–that buy the books that the author and publisher co-create and market. So I think VC customers are the firms that either acquire their portfolio companies or help them to go public (e.g. underwriters, merchant banks). It’s the acquiring company or the public market that ultimately “pays the VC” so they are the customer. The entrepreneur is a partner and the LP is an (co-)investor.

]]> By: nicheVC http://larrycheng.com/2009/09/27/who-is-the-venture-capitalists-customer/#comment-965 Sun, 27 Sep 2009 18:59:10 +0000 http://larrycheng.wordpress.com/2009/09/27/who-is-the-venture-capitalists-customer/#comment-965 In keeping things simple … consider that the entrepreneur is the end user, whereas the LP is the customer. You sell to and provide ROI to your customer and market to and serve the end user.

]]> By: Apolinaras "Apollo" Sinkevicius | LeanStartups.com http://larrycheng.com/2009/09/27/who-is-the-venture-capitalists-customer/#comment-964 Sun, 27 Sep 2009 16:41:26 +0000 http://larrycheng.wordpress.com/2009/09/27/who-is-the-venture-capitalists-customer/#comment-964 Larry,
Glad to see you have such an outlook towards entrepreneurs you partner with. Unfortunately, you are in a minority, or at least that is the reputation VCs have developed. Every company I have worked for was self-funded (mostly through revenue – sell before you build). Founders of every one of those companies would’ve rather skipped on starting a company, than to deal with a VC. It was not easy running business operations for those companies, it required boostrapping and seemed like I always had to create and hack things out of nothing… but at least sharing those profits seemed a lot sweeter.

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