A little give and take: the troubled marriages of VC and entrepreneurs

In June, dot-com incubator eSouk became one of the latest web-related ventures to admit things aren't entirely rosy on the investment front. The first signs of trouble appeared when one of its flagship investments, news website Netimperative, threw in the towel. (It has since had a reprieve.)

As performance went from bad to worse, CEO Azeem Azar's personal reputation was on the line - he'd once claimed it to be the one investment that could not fail. But things are not going according to plan. So what went wrong?

The problem is that, generally, there is still little harmony between investors and entrepreneurs.

British net entrepreneurs often complain about the lack of venture capitalists queuing up to back their ideas. It's true - the UK still lacks trailblazing, risk-taking capitalism.

However, the main problem is that there is no tradition of entrepreneurialism - that is, individuals with good ideas who are willing to welcome investors with open arms without begrudging a return when success is achieved.

In a recent Online Research Agency survey of new economy entrepreneurs, over 40 per cent of interviewees described incubator companies as "greedy". Of course some are, but there is a certain naivete in that response. The eighties never went away for the venture capitalists - greed is still good.

Over 70 per cent of respondents said their key requirements, apart from money, are contacts and alliance partners. What start-ups are really looking for, it seems, is more networking opportunities. Fair enough.

But half hadn't thought of going to incubators as a source of integral support. Only 41 per cent thought technical guidance and strategic advice to be a very important service, and a measly 36 per cent mentioned the preparation of business plans as an area where assistance is needed.

When it comes to opening up a business to a venture capitalist, many entrepreneurs clearly aren't too keen.

Moreover, most entrepreneurs seeking an incubator are horrified to discover the cost of the backing - 50 to 70 per cent equity stake is commonplace in this risky and fragile area. All too often they resent anyone else profiting from "their" idea.

The bottom line is that entrepreneurs want to stay in control. What a terrible idea! Most cannot control themselves, let alone a company. With a few exceptions, the best partnerships should allow an entrepreneur with specific insight to add value to the company, take their reward in equity and then move on to the next idea.

Control-freakery and protectionism are obstructive and undermine the health and performance of incubator relationships. If they are to flourish, these attitudes must be eliminated.