To recognize how venture capitalists are killing companies, you need to understand how venture capitalists work.
Venture Capital firms typically have managers who we come to think of as investors because they sign the checks. The limited partners, on the other hand, are the investors in the venture capital firms themselves. Why are they called “limited”? Limited partners don’t actually invest in VC firms or start-up companies because they invest in an individual firm. Most of these limited partners are massive financial institutions who work with venture capital on a diversified investment strategy capacity.
And once a fund is raised by investors, the money is committed for the life of the fund. Venture capitalist then takes the limited partner’s money and use it to invest in a bunch of stock. Mind you; there are strict rules on what VC funds can do with the money because they are limited partnerships.
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