What are the conflicts of interest between venture capitalists and founders?

Someone asked on Zhihu: Why do VCs keep asking for follow-up financing? What are the advantages and disadvantages of this "follow-up financing" for venture capitalists and founders respectively? Founders will care about what they develop, but venture capital will soon bring damage. Why does venture capital bring destruction? Besides the answers to the above questions, what are the potential conflicts between venture capitalists and founders? The answer to the above question is that all industries are similar, or is it limited to the Internet industry? Fanlee, investment director of Hangzhou Angel Bay, has his own opinion. First, let's take a look at the situation of Camera+. Just last month, tap tap, a camera+development company, rejected the acquisition proposals of Google and Twitter, and rejected VC, and finally decided to give up financing because they "don't like the direction set by investors for the company", so they decided to remain independent. Casasanta raised his middle finger to venture capital firms. He said, "I have said it before, and I want to say it again. Fuck venture capital! " Casasanta2008 wrote a blog post in 2008, talking about the argument between him and VC. He said: "VC will give you enough money to make the ball spin, but it will keep asking you about the follow-up financing." You have no choice but to give up more and more things you have built. To make matters worse, VC usually invests in a large number of startups, hoping that one of them can grow and develop. Founders will care about what they develop, but VC will soon bring destruction. They will reduce their losses, no matter what effect it will have on those who are committed to it. In the past few years, many people I know have encountered this problem. "So just can appear the problem mentioned in the first paragraph. Fanlee, investment director of Hangzhou Angel Bay, thinks that the child who invited me to answer this question must not be a good boy, which simply pushed me into a fire pit! This is really a difficult question. I never like to say what I don't want to say. Well, it's really embarrassing. Since you trust me, say something. (digression) 1. Why does VC always ask for follow-up financing? Me: Continuous financing is a potential guarantee for investors' return on investment in the early stage, and it is also a shot in the arm for psychological comfort. When an early investor invests in real money, of course, everyone hopes that this project can develop rapidly, which is reflected in the rising valuation. Without the approval and intervention of subsequent investors, this valuation will be a large amount of book wealth. Unless the project itself can quickly achieve self-profit and get dividends from shareholders, the investment of investors will become a backwater. But then again, ordinary projects can also have good cash flow and good hematopoiesis. How can there be no follow-up investors to follow up? In fact, once entrepreneurs embark on the road of financing, it is bound to be a road of no return. Whether he is a road or a thief boat, continuous follow-up financing until IPO is theoretically the best exit path for investors and entrepreneurs. Think carefully, hard-working entrepreneurs, investors have given so little money in recent years, and how dare they give themselves a high salary? Who didn't drink boiled water and eat steamed bread a few years ago? Most investors' money is used for company development and solving the daily living expenses of entrepreneurs, not for the entrepreneurial team to enjoy. Therefore, for entrepreneurs, unless the company pays dividends or continues financing, with the improvement of valuation, personal wealth will also increase, then the shares will become more and more valuable, and the salary will become higher and higher until the salary of listed founders is the market average or even higher salary of professional managers. At this time, in life, the salary alone is rich enough, but your shares can make you richer. Of course, early investors can also get a return by withdrawing early, but entrepreneurs generally can't (restrict the right to sell). Investors are all preferred shares and common shares, and it's their turn to return. So, if there is no follow-up financing, how can the previous angel wheel and early investors withdraw from some of them? How to continue to cycle the entire investment industry chain? For the later investors, in order to get a return as soon as possible, you will also go to IPO as soon as possible. This chain is doomed from the beginning of financing. 2. What are the advantages and disadvantages of this "follow-up financing" for venture capitalists and founders respectively? Me: The advantage is that investors are more dominant. With the improvement of financing and valuation, his potential withdrawal will be guaranteed, including the entrepreneurs themselves will have some ways to withdraw, which will greatly enhance their self-confidence. The disadvantage is that some investors who are eager for quick success and instant benefit will urge entrepreneurs to do data like death warrants, do traffic as market users, and deceive themselves into entering the next round of financing. Entrepreneurs who are not firm or simply collude with each other may be true. What's more, some unprofessional investors know nothing about themselves. They invest money like uncles and have a strong desire for control. If the product interferes with the operation, we should step in and even ask management questions. In the end, even the CEO felt stupid and wanted to change directly. Generally speaking, the basic outcome is that everyone is finished. Business has its own ecological chain, and of course it has its cycle. No matter entrepreneurs or investors, they must follow the heaven of business. Haste, sharpen, kill, stop ... urgent and urgent, slow and slow, but what else can nature do? 3. The founders will care about what they develop, but venture capital will soon bring destruction. Why does venture capital bring destruction? Me: For entrepreneurs, I know each other's feelings very well. Just like when I started my own business, I always asked myself why I worked so hard and for what? When investing now, I always ask some entrepreneurs why they want to start a business. Don't blame me for asking such a stupid question, I really want to know. After listening, basically in the order of proportion, I summed up something as follows:-For freedom, my brothers and I can do what I like best, and then I don't have to look at other people's faces. Cool! -For wealth, for myself, my family and my brother, live a high-quality life ...-To prove, for a sense of accomplishment, not for money, not for fame, to prove to XXX that I can do it.-If nothing else, my life is bad. This is my way. Therefore, entrepreneurs regard what they do as a treasure for various reasons, even if it is worthless in the eyes of others. Especially the first kind of people, their love for their products is really like their children, even their lovers. Some entrepreneurs who are not tolerant enough, as long as they say that their products are not good at all, immediately beat Shui Piao like a hedgehog, just like saying that they are impotent. Do you think investors will be so rational? Especially those investors who have never created their own enterprises, products or operations, will they feel as keen as you? So their positions and angles are naturally different. On the other hand, if you think about it from his point of view, millions of glistening money, for no reason, chatted several times, ate several times, and even some angel investors beat the blood on him, signed contracts on the spot, and made money at night. Do you think it is easy for others? A complete stranger Why? People's money is not hard-earned money? He used it to pick up girls and buy villas, yachts and sports cars. What's the matter? Do I have to vote for a poor loser like you? Yes, people have to make big returns, but as far as I know, being an early investor is really not greedy, idealistic or even helpful. I really can't do it well. The biggest harm comes from two aspects: one is the blow to entrepreneurs' products. For various reasons, a good investor's greatest wealth is to make stupid mistakes and bloody lessons. All entrepreneurs make these mistakes. Now when your project is analyzed by him and he finds that he is making the same mistakes as others, he will point it out directly, which is sometimes fatal to some stubborn young entrepreneurs, because if you follow the advice of investors. Is it right or wrong? I don't know how to do it, but this kind of destruction is of course great; Second, investors in the middle and late stages are eager for quick success and instant benefit. In the whole investment industry chain, investors in the middle and late stages are generally more eager for quick success and instant benefit and less professional because of the natural attributes of their investment roles. They are experts in capital and finance, but not necessarily experts in specific products and details. So some investors stare at data and cash flow. Once investors only pay attention to these and then start fattening entrepreneurs for data, the potential damage is also great. How to grasp the balance, rhythm and pace, I don't know, and I dare not say, come back and teach me after you have experienced it. 4. Besides the answers to the above questions, what are the potential conflicts between venture capitalists and founders? Me: I can't finish talking about potential conflicts. Because different investors and entrepreneurs have their own best stories, how can they tell them all? But I believe that investors and entrepreneurs should have a certain tacit understanding, be reliable to each other, and have relatively close business values, even the values of being a human being. Just like some projects I have observed that I am responsible for or like, basically the leaders of these projects have some similarities not only in business values, but also in some world views, including political views and outlook on life. Generally speaking, I strongly advise entrepreneurs to say: Never set investors against companies and teams. Investors should be a back-to-back partner, another brother besides your brother, but often appear as an institution. Good investors will encourage you when you are frustrated. Don't be afraid. We still support you. We will help you tide over the difficulties and hit you when you are proud. Don't pretend. Look at your competitors and see if your face is disgusting. 5. Is the answer to the above question similar to all industries, or is it limited to the Internet industry? Universal. For the relationship between venture companies and VC in financing and acquisition, please read Lei Feng's previous article "If financing means marriage and acquisition means death". What is the reader's opinion? Welcome to discuss.