How VCs Rub Off on Their Investments | Sapling

How VCs Rub Off on Their Investments

Image Credit: Maskot/Maskot/GettyImages

If you're into the venture capital scene, either as a pure spectator or a hopeful unicorn, tracking which investors tap which companies is as thrilling as celebrity gossip or political scuttlebutt. Films like The Social Network or TV shows like Silicon Valley illuminate the take-no-prisoners approach that makes cool billions for the right people at the right time. Those stories also tend to remind us to be careful what we wish for, though.

A new study from Portland State University lends credence to that perspective. Researchers in the business school have found that the cutthroat, competitive, and often discriminatory character of venture capital firms tend to influence the companies they invest in, and not always in a beneficial way. The VCs "often push a business they are financing to prioritize long-term financially-based goals instead of socially responsible business ones, like fair wages, reducing carbon footprints, or improving labor policies."

Not only are VC-backed companies less likely to monitor and snuff out internal problems like sexual harassment, but they also tend to make returns less steady. Per the study, "Compared to non-venture capitalist–backed companies, venture capitalist–backed companies presented significantly lower assets, sales, tangible assets, inventories, returns on assets, profit margins and debt levels, as well as higher intangibles and current ratios."

Company culture is one of the most important things leadership can bring to a business. You don't have to walk away from VC money, although there are alternative paths to funding gaining steam. Just be sure you're the one who's truly in control of directing it.