Hubspot founder Dharmesh Shah shares more entrepreneur-friendly insights into VC motivations, which (though I may not agree with them all) are definitely worth reviewing before raising capital. I reprint three in particular here:
1. Remember that VCs have a diversified portfolio of investments and can spread their risk. You can't. Don’t try to compensate by pursuing a bunch of different ideas simultaneously with the hopes of diversifying your risk. It doesn’t work that way.
2. VCs negotiate term sheets and financing deals for a living. You don't. Accept this imbalance early and find great advisors and counsel. VC negotiation, even in early-stage deals is highly nuanced and reasonably complex.
6. Transparency is crucial. Don't try to hide facts about the startup you know are important. They will come out eventually, and later is rarely better for you. From a VC’s perspective, the act of hiding unpleasant facts is in many cases a worse signal than the fact itself. It goes to the integrity and behavior of the founders.
To the last one I would add that you're far better off pitching your company realistically and then overperforming during diligence, than pitching aggressive targets and missing them before the deal closes. We're not big fans of the tactic of cutting price during due diligence, but like most investors we'll do it if there is bad news that impacts value. You may not get a price increase for delivering good news, but you will avoid a price cut and most likely accelerate closing as well...