Sometimes, conflict between VCs and entrepreneurs is a good thing

You hear the word ‘alignment’ thrown out a lot in business conversations. And while it’s a wonderful thing to aspire to, it’s hard to achieve – particularly in entrepreneurial settings between the venture capitalist and the entrepreneur. It’s there, after all, that the stakes are high and there’s the ever-present risk of dysfunctional behavior leading to a Start-Up Soap Opera.

Ever since I began the research for my book, I have been spending time thinking about why VC-entrepreneur alignment is so elusive. And so when the Kauffman Foundation asked me to give a presentation to their recent class of young VCs, I decided to take the opportunity to develop a few thoughts that teed up the key issues.

I concluded that despite all the aspirational rhetoric about VCs becoming more “entrepreneur-friendly,” there are structural reasons why VCs and entrepreneurs are not always aligned. In negotiating term sheets, performing the inside-outside financing dance, discussing exit scenarios – and many other elements of the start-up journey - misalignment between VCs and entrepreneurs is common, natural and inevitable.

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Author: Jeff Bussgang