Edited excerpt from The most fatal mistake to avoid as a startup, a presentation I gave to a group of startup founders:
1. VCs are not product people, they are momentum investors. They look at their companies which are growing (ie. found product-market fit and are now scaling) and incorrectly pattern match to your company. “My most successful companies invest a lot in customer acquisition, so you should too”. But they don’t realize that those companies found product-market fit, and you haven’t yet. It’s like saying “The most valuable buildings have many floors, so you should be adding floors to this building” — when you haven’t yet finished the foundations.
2. They just invested money in your company, and they want to see you use it. VCs often view a successful investment as one which accelerates a company’s growth, and they want to see you achieve that growth immediately. For example, they’ll ask: “What’s your hiring plan?” But scaling your hiring is one of the key things you shouldn’t be doing before product-market fit.
For these reasons, VCs often add bad pressure on founders to scale prematurely.
(1) “Most VCs are not product people” — see VCs are not product managers and Investors, VCs and product advice.
(2) “…they are momemtum investors” — see Most VCs are momentum investors.
(3) VCs can add bad pressure — see For CEOs and VCs: Good pressure or bad pressure?