Startup entrepreneurs are trained (brainwashed?) to pitch to VCs or their seed fund proxies as soon as possible.
The short answer is that this is the pattern established by the original Y-Combinator program by Paul Graham in 2005 to prepare startups to be presented to potential investors.
But the answer behind the answer is that VC funds are like trawlers: they need to cast a wide net to find that one-in-a-thousand startup with the potential to become a billion-dollar exit.
The search for that elusive unicorn exit is the main reason why most VC funds are not profitable.
I like this detailed overview of the VC business model as described from an entrepreneur perspective, by Tomer Dean on TechCrunch:
I recently had a meeting with a well-known Israeli startup investor. The talk somehow pivoted from my seed-seeking startup into talking about the macro view of venture capital and how it doesn’t actually make sense. “Ninety-five percent of VCs aren’t profitable,” he said. It took me a while to unde…