One of the costs of raising venture capital is overhead: it takes a lot of energy to navigate the complexity of term sheets, to manage investors, and to navigate follow-on rounds of funding. It gets even worse if you’re dealing with “unique” investor personalities, immaturity, lack of experience, or intra- and inter-firm politics. One CEO friend recently bemoaned that 25% of his time went to “investor stuff” — that’s a typical number.

Venture investing is not a simple business, and investors are adept at adding terms and structures that protect increasingly narrow outcome cases. If getting a home equity loan were like raising venture capital using a FHA loan application, the kick off meeting has 4 people coming to your house and would take all day.

Investors argue this is the cost of doing business: no capital, no company. True, but the overhead has become a real issue in certain sectors (e.g. Internet projects) where the capital requirements are dropping. If you have an idea that needs $500k, and you raise money the “classic” way, you’ll spend 10% of your capital on the legal bill alone. (Remember, the company is paying both sides of the legal bill).

There’s got to be a way to fund capital-efficient ideas with lower overhead (and more time going into creating value in the company). I don’t know what the answer is, but I did think Dave McClure’s rant on the general subject was dead on.