The other half of my point is that in some transactions, "should" and "fair" don't matter. Either the terms make sense for them, or they don't. Terms that make sense aren't fair? Can't reasonably accept them? Ok. No deal.
VCs are professional deal makers. They can't code, they can't round HTML corners, they can't even write copy. Their one skillset is optimizing the problem of allocating other people's money in small companies for optimal return.
Parent commenter is right in that you should push back and negotiate as hard as you can. If you're a better bet than any of the 10 other prospects they're prepared to fund instead of you, you might win. Otherwise, nope. But there's no sense getting angry about it; nobody can reasonably say that a venture capitalist is obligated to fund anyone, on any terms. The sole moral obligation of a VC is to obtain the maximum return for their limited partners. Some of them bend over backwards to try to make things better for company "operators"; in a very reasonable way of looking at things, the VCs who do that may be the ones who are acting unethically.
The other half of my point is that in some transactions, "should" and "fair" don't matter.
I'll give you "fair", but I think "should" has a very real meaning: If for every deal X which does not have property P there is a deal X' which does have property P such that for every participant utility(X') >= utility(X), then the participants should negotiate a deal with which has property P. To take an example I ran into recently: You should never simultaneously buy a life annuity and life insurance (on average they cancel each other; but you have to pay two risk premiums).
This may sound trivial, but it's useful for recognizing dishonest actors: If someone wants a deal which doesn't have the properties you think it should have, their utility function isn't what you think it is. In the above example, if your financial advisor is trying to convince you to buy both a life annuity and life insurance, it tells you that they're thinking about the commissions they can earn, not about optimizing your finances.
Some [VCs] bend over backwards to try to make things better for company "operators"; in a very reasonable way of looking at things, the VCs who do that may be the ones who are acting unethically.
I agree: They're sacrificing the current fund's returns (by making deals which are suboptimal for them) in order to improve their reputation (a personal benefit) and allow themselves to get better deals in the future (thereby improving future funds' returns).
An angel can spend his money to be your friend. A VC shouldn't spend his clients' money to be your friend.
The other half of my point is that in some transactions, "should" and "fair" don't matter. Either the terms make sense for them, or they don't. Terms that make sense aren't fair? Can't reasonably accept them? Ok. No deal.
VCs are professional deal makers. They can't code, they can't round HTML corners, they can't even write copy. Their one skillset is optimizing the problem of allocating other people's money in small companies for optimal return.
Parent commenter is right in that you should push back and negotiate as hard as you can. If you're a better bet than any of the 10 other prospects they're prepared to fund instead of you, you might win. Otherwise, nope. But there's no sense getting angry about it; nobody can reasonably say that a venture capitalist is obligated to fund anyone, on any terms. The sole moral obligation of a VC is to obtain the maximum return for their limited partners. Some of them bend over backwards to try to make things better for company "operators"; in a very reasonable way of looking at things, the VCs who do that may be the ones who are acting unethically.