One leg at a time…

Entrepreneurs sometimes look upon VC’s like some kind of supernatural, infallible, ever-wise uberMortal.

And of course nothing could be further from the truth. VC’s are first and foremost people, just like you and I, with strengths and weaknesses. They make mistakes about as often as anyone else does.

The only thing that really gives them the aura is the money and their ability to direct it. But don’t let that fool you. Just ’cause they have a lot of money, doesn’t always mean they know how to invest it.

Want proof? Read “Redpoint Ventures raises $400 million, despite mediocre results” to get a dose of reality:

As of Sept 30 of last year, Redpoint’s $600 million first fund, raised in Oct. 1999, was showing a negative 18.5 percent internal rate of return, according to the University of California endowment, which is an investor.

As of June of last year, Redpoint’s $750 million second fund, which was raised in August 2000 (it was initially $1.25 billion, but Redpoint later returned money to investors, saying it couldn’t invest it all) had an internal rate of return of negative 13.9 percent.

I think it really helps to remember that VC’s put their pants on one leg at a time. When you go asking them for money, just remember that they’re not Gods, just a bunch of people trying to make the right bet on the right company, and most of the time they are wrong.