Many of the people I know in the venture capital business think their customers are their investors, called LPs in the industry vernacular. I’ve always thought that was dead wrong.
The entrepreneur is the customer and the LP is the shareholder. That’s the only way to think about the venture capital business that makes sense to me.
What makes this so hard to grok for many in the venture business is that much of the selling we have to do is when we raise money. Once the money is raised, the entrepreneurs are the ones who come into our offices in "sell" mode. And that dynamic warps many VC’s perspective of the business.
I start with the value chain. The entrepreneur creates the value, they are the "raw material" in the venture capital business. If there were no entrepreneurs, there would be no venture capital business. So the VCs who treat the entrepreneur like the customer and invest heavily in customer service will be rewarded with the loyalty of the most important component in the value chain.
Money on the other hand is a commodity, whether its in the hands of the LPs or the VCs. Money flows to the best returns and always will.