Brent Summers summarized my interview with Steve Blank for Startup Grind, where Blank revealed venture capital is nothing more than a “liquidity Ponzi scheme.” Blank is a startup icon and is the go-to guru for many entrepreneurs who are looking for funding. He warns that when you take money from someone, you’re hooked. Their business model is now yours. “Understand, your VCs are a business. If you can’t draw how they make money, you’re screwed.”
Consider the motives of VCs and think from their perspective. Most are in it for the money, not to change the world. In fact, they have bosses, too! Even if they like you, they’re still crafting a Ponzi scheme. If you go public and go liquid, it’s in their benefit. But what about yours? Disappointment runs rampant when entrepreneurs don’t “get it.”
Blank has held the hands of many founders in the startup process, and knows that it takes passion to get through tough times. He’s also noted that oftentimes, the most resilient and successful of founders come from family units that are dysfunctional. In other words, a rough beginning can make you into an entrepreneur who can pick up what VCs put down.
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