Seth Godin, the A-List blogger, marketing author, and extraordinary speaker has written a great post about venture capital. Even though one would attribute him as solely an author, he’s had experience at the helm with Yoyodyne, a leading interactive agency acquired by Yahoo in the late 90s.

Rarely touching upon venture capital and finance, Seth has ventured into a heavy hitting top list that goes against many highly optimistic entrepreneurs. Personally, I happen to find his list quite interesting and agree with him on many points. Below is his list - and my notes next to each point.

1. Investors like to invest in categories they’ve already invested in. If your business is so new that it’s never been tested before, or is in a category VCs hate, think twice. (DH: There was no in-game advertising company in our space before came to market and we landed over $17 million in funding…)
2. Investors want you to sell out. As soon as possible. For as much as possible. They have no desire to own part of your company forever. (DH: this reminds me of record labels in the music industry. They sign a band and want them to change 50 million different things about them. I’ve had positive experiences with our VC’s but I’ve seen and heard about companies getting pushed to sell)
3. Investors want to invest in a project that’s tested. If you can’t make it work in the ’small’, why do you think it’ll work when it’s big? (DH: fairly agree)
4. Being a little better than the market leader is worthless. (DH: as Seth says himself, be remarkable)
5. Investors don’t want you to use their money to cover your losses. They want you to build an asset (a patent, an audience, channel relationships) that’s actually worth something. (DH: patents aren’t worth that much in the digital media space, but relationships are. Get those contracts!)
6. Investors want someone to run your company who has successfully run a company before. (DH: depends on what stage you are at and how you’ve done so far, but as an entrepreneur, get ready to give over the reigns at a point in time)
7. Investors want to be able to come to one of your board meetings and still make it home in time for dinner. (DH: cute)
8. VCs like curves more than they like cliffs.
9. There are actually very very few business problems that can be solved with money. (DH: this is very true, usually a bleeding ship is a sunken ship)
10. You will probably have to replace many of your employees if you raise money from someone. (DH: could happen)
11. VCs understand that being the best in the world (#1) is the place with the biggest rewards, so it’s unlikely they will settle for any performance (even a profitable one) that puts you in second or third place. (DH: being the first ’sold’ isn’t necessary the best as they could have many influences to that acquisition. There are many reasons why someone in #2, #3 position may sell for more eventually)
12. VCs are very smart and very connected, but they’re smart enough to know that their connections and their insights can’t fix a broken business. (DH: very true!)
13. Investors are very focused on the company, not you. They’re not interested in having you take out your original investment or paying you a large salary as profits go up. (DH: yep)
14. Business plans are bogus. The act of writing one is critical, but no one is going to read more than three pages of what you write before they make a decision. (DH: all VC’s are different, but most will tell you that the act of writing the plan is crucial for any founding team)
15. The companies that VCs most want to invest in are the companies that don’t need their investment to survive. (DH: very true, as these companies are sustainable and have shown a good track record)