How Active are Venture Capitalists in the Daily Operations

This varies firm by firm. One friend tells me that the backers of their company call seven time per day. It's so many calls that the CEO can't do any work. In our case, its very different.

I think a good venture capital firm lets you run the business. However, they participate through their experience and assist with strategic introductions, directions in the market, management counseling, and sit on the board.

Early stage companies should plan to communicate with their investors regularly. Sending updates and informal meetings at least once per month on top of a monthly board meeting.

I recently heard an anecdote about top VC firms. They realize that they put 99% of their effort into companies with problems. The net result of their efforts with these companies is a poor return on investement. Also, when companies need little help, that these companies provide superior returns.

So for venture capitalists, they are better off trying to find other great companies than putting tons of effort into manageing portfolio companies.