The Top 10 Lies Entrepreneurs Tell VCs ANS

Here's an interesting article -- and short too.  It's supposed to be amusing, but it's really just the plain truth.... About venture capital. 
Find it here:  http://blogs.wsj.com/venturecapital/2010/11/17/the-top-10-lies-entrepreneurs-tell-vcs/  
--Kim

The Top 10 Lies Entrepreneurs Tell VCs

By Venture Capital Dispatch

The following dispatch comes from Ben Rooney, the technology editor of The Wall Street Journal Europe:

The Dublin SmartCamp 2010 final is a grand affair. The main sessions are housed in the same building in which the first Dáil Éireann sat ­ and was apparently built in eight weeks which is a lot faster than a lot of start-ups.  

Everett Collection

Sitting in on a very funny presentation by Bill Reichert, managing director of Garage Technology Ventures, gave the entrepreneurs advice on how to raise funds, and more importantly how to talk to VCs.

His best slide of all ­ the top 10 lies entrepreneurs tell VCs:

1. Our projections are conservative
2. Our target market is $56 billion
3. We have a world class team
4. Our average sales cycle is 90 days
5. We have no direct competitor
6. No one else can do what we do
7. All we need is 2% of the market
8. Well be cash positive in 12 months
9. Our contract with [Big Company] will be signed in two weeks
10. I'll be happy to hand over the reins to a new CEO

He did admit the top three lies that VCs tell entrepreneurs:

1. I love your company, I just can't get it through our partners
2. We are really interested in investing in you, we just need to see a bit more traction
3. … and the one that got the biggest laugh ­ We really add value

He also confessed the real reason why VCs invest in start-ups. "VCs do not invest with their brains. They invest with companies that they fall in love with. Then they use their brains to rationalize their decision.

"What causes a VC to fall in love with a company. Most VCs fall in love with the entrepreneur."