A Well-known VC Answers: Why Do People Become Venture Capitalists?

What exactly compels people to become venture capitalists? Recently, in the span of about a week I saw competitors to the company where I am the marketing director get $10M, $16M, and $35M in VC money. This got them written up in TechCrunch, Forbes, CNN, Mashable, et al.

Uh.

Then I went to their respective websites to look at what kind of people they were hiring to get an understanding of how they were going to use that money to build products that could potentially fill gaps our company was missing.

More uh.

I felt sad

I have to admit, seeing our competitors get funded like this made me feel sad. In the song Ritzville, performed by the band Mudhoney, Mark Arm sang, “I wear my heart on my sleeve and my head on the curb”. That pretty much describes me in situations like this.

But after I discovered that the founder of the firm that funded one of our competitors was a professor at NYUs Stern of School of Business, I picked my head off the curb and began to wonder what actually possessed people to become VCs – more specifically, what are the non-obvious reasons (money/power/fame) why?

The tweet

After a friend and respected SEO sent this tweet, I knew I had to go on the quest for an answer to why people become VCs:

So I sent an emails to big-name VCs like David Cohen (no, I didn’t email myself), Fred Wilson, Brad Feld, and several others.

Brad Feld’s email response kind of made me feel like an idiot, and I never heard from Fred Wilson. A few other VCs emailed me back with answers that spanned the realm of incoherent to incomprehensible to demeaning.

Although it was short, David Cohen’s response to the question about why people become VCs was the best. And if you don’t know, David Cohen is the founder and CEO of TechStars, he’s a mentor to start-ups, a VC, and a seemingly high-quality individual.

An answer to the question about why people become VCs:

Here’s what David said in his email response to me:

davidmcohen.com-why-do-people-become-venture-capitalists

In case you didn't read what's on the image, David said:

I started investing in companies as an angel investor because I couldn't imagine anything more fun to do. It seemed like great mental exercise and a way to use my experiences to help change the world for the better. Based on early success, others wanted me to invest their money as well, which lead me down the path of venture capital.

He became a VC because he wanted to help change the world

Now I’ve written in the past about this whole idea of ‘changing the world’. But take a deeper look at what David said in his response to my question – he wanted to use his experience to change the world – and people wanted his experience to help them change the world.

And there you have it. David became a VC to put his experience into action to help start-ups who want his experience to change the world. If that doesn’t make you tingle a bit, check your pulse.

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  • Oliver Lane

    Ok this is really cool. You are definitely not the only person who have wondered this. I did a google search for the question about why people become venture capitalists and it didn’t come up with much but this was the best information. Found you through Twitter mate. Cheers.  

    • http://www.davidmcohen.com/ David Cohen

      Thank you, Oliver. 

  • Oliver Lane

    Ok this is really cool. You are definitely not the only person who have wondered this. I did a google search for the question about why people become venture capitalists and it didn’t come up with much but this was the best information. Found you through Twitter mate. Cheers.  

    • http://www.davidmcohen.com/ David Cohen

      Thank you, Oliver. 

  • Oliver Lane

    Ok this is really cool. You are definitely not the only person who have wondered this. I did a google search for the question about why people become venture capitalists and it didn’t come up with much but this was the best information. Found you through Twitter mate. Cheers.  

    • http://www.davidmcohen.com/ David Cohen

      Thank you, Oliver. 

  • http://www.learningisdiscovery.com Shawn Cohen

    And don’t write off Fred Wilson–he goes into detail about how he tackles email on his blog. It’s pretty hit or miss. If you had caught him at the right time, he would have had an awesome response.

    • http://www.davidmcohen.com/ David Cohen

      Oh I’m not writing anybody off. My expectations of getting any kind of response were low just for the fact I know these folks are crazy busy. I’m grateful for all of the responses, even the bizarre responses.  

  • http://www.learningisdiscovery.com Shawn Cohen

    And don’t write off Fred Wilson–he goes into detail about how he tackles email on his blog. It’s pretty hit or miss. If you had caught him at the right time, he would have had an awesome response.

    • http://www.davidmcohen.com/ David Cohen

      Oh I’m not writing anybody off. My expectations of getting any kind of response were low just for the fact I know these folks are crazy busy. I’m grateful for all of the responses, even the bizarre responses.  

  • http://www.learningisdiscovery.com Shawn Cohen

    And don’t write off Fred Wilson–he goes into detail about how he tackles email on his blog. It’s pretty hit or miss. If you had caught him at the right time, he would have had an awesome response.

    • http://www.davidmcohen.com/ David Cohen

      Oh I’m not writing anybody off. My expectations of getting any kind of response were low just for the fact I know these folks are crazy busy. I’m grateful for all of the responses, even the bizarre responses.  

  • David Angotti

    Interesting timing on your post – today SEOmoz announced 18M in funding from the foundry group:   
    http://www.seomoz.org/blog/mozs-18-million-venture-financing-our-story-metrics-and-future The drama of VC collides with SEO!

    • http://www.davidmcohen.com/ David Cohen

      Yeah no doubt. I find the whole VC world rather fascinating and the VCs themselves even more fascinating. Can’t wait to see how Moz uses this cash infusion to build amazing stuff.

  • David Angotti

    Interesting timing on your post – today SEOmoz announced 18M in funding from the foundry group:   
    http://www.seomoz.org/blog/mozs-18-million-venture-financing-our-story-metrics-and-future The drama of VC collides with SEO!

    • http://www.davidmcohen.com/ David Cohen

      Yeah no doubt. I find the whole VC world rather fascinating and the VCs themselves even more fascinating. Can’t wait to see how Moz uses this cash infusion to build amazing stuff.

  • David Angotti

    Interesting timing on your post – today SEOmoz announced 18M in funding from the foundry group:   
    http://www.seomoz.org/blog/mozs-18-million-venture-financing-our-story-metrics-and-future The drama of VC collides with SEO!

    • http://www.davidmcohen.com/ David Cohen

      Yeah no doubt. I find the whole VC world rather fascinating and the VCs themselves even more fascinating. Can’t wait to see how Moz uses this cash infusion to build amazing stuff.

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