When interacting with VCs, it is important to understand their incentives and motivations (stated and revealed). This will be helpful when meeting VCs you are pitching, when communicating with existing investors (i.e. updates), or even when schmoozing with VCs at happy hours and whatnot. This will seem harsh, but note that it is the most cynical version possible, put here as a reference and an extreme. There are countless VCs that do not fit these descriptions, but overall, understanding the tide you’re in allows you to better sail within it.
The incentive structure of VCs (external):
Convince rich people (or their gatekeepers) that they can invest well. Convince people to send them deals. Convince themselves that certain deals are the best ones. Convince founders that they should take their money.
And hopefully actually return money to LPs.
Who VCs think they are:
Smart, contrarian, can find great opportunities where others will not
Insecurities of VCs:
That they are deluding themselves and wasting money on stupid startups that were obviously stupid. This is a very important point - while every investment needs to be able to generate the excitement for the partner to believe it is capable of returning the fund… it also needs to have plausible deniability.