Paul Graham proposes A Unified Theory of VC Suckage:
But lately I’ve been learning more about how the VC world works, and a few days ago it hit me that there’s a reason VCs are the way they are. It’s not so much that the business attracts jerks, or even that the power they wield corrupts them. The real problem is the way they’re paid.The problem with VC funds is that they’re funds. Like the managers of mutual funds or hedge funds, VCs get paid a percentage of the money they manage. Usually about 2% a year. So they want the fund to be huge: hundreds of millions of dollars, if possible. But that means each partner ends up being responsible for investing a lot of money. And since one person can only manage so many deals, each deal has to be for multiple millions of dollars.
This turns out to explain nearly all the characteristics of VCs that founders hate.