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November 14, 2004

"VCs are a hindrance for experienced entrepreneurs": Kintera CEO

While venture capital serves a valuable role in providing capital and partnership to young entrepreneurs, "if you have a seasoned management team and a track record, VCs are more of a hindrance than a help". This according to Harry Gruber, co-founder and CEO of Nasdaq-listed Kintera Inc., which provides software and services to help for non-profit organizations raise funding through the Internet.

Gruber, a trained medical doctor, has raised funds from leading VC firms like Kleiner Perkins Caufield & Byers and 3i Group for his earlier companies including two publicly traded biotech firms and InterVu (a provider of Internet video and audio delivery that was acquired by Akamai Technologies in 2000). For Kintera, Guber avoided VCs and had raised about $30 million from high net-worth individuals, before taking the company public in December 2003.

"VCs have a need to gain control of their investments because founders are typically inexperienced. So, certain decisions are made by the VCs that are not always in the best interest of the founders," Gruber says in an interview to Venture Capital Journal. "VCs use entrepreneurs to educate them on the industry. It's free labor for them. But it's not a healthy relationship long-term for entrepreneurs."