Too few entrepreneurs - in Africa or elsewhere - truly understand venture capital and how it works, but even fewer understand what it is to take on VC into what used to be your business, but is now “a business owned by multiple people in which you work”.

That is according to Jason Goldberg, founder and CEO at 10X Entrepreneur, a 24-month accelerator programme that overcomes the barriers to growth for entrepreneurial executives, who was speaking to Disrupt Podcast for its four-part mini-series “The essential guide to African VC”.

The series delves into venture capital, looking at its business model, how start-ups and VCs can work together to build Africa’s tech ecosystem, and what issues still remain to be resolved.

“Entrepreneurs should not take on VC money until they are really understand what change bringing on VC money will bring about,” Goldberg said.

“There are good, bad and ugly VCs. You should avoid the ugly ones, you should tread with caution with the bad ones, and you should go for the good ones. But even with the good ones you are not going to like the changes that come about after you’ve taken on VC money if you weren’t ready for them.”

He compares taking on venture capital to growing up on the street without a mother or father, doing exactly as you wish, and all of a sudden obtaining parents.

“If you don’t appreciate what parents can do for you, then you’re going to start hating life, even though this is possibly one of the best things that ever happened to you. It comes down to understanding the value of accountability, and of a shareholder mindset in the running of the business,” said Goldberg.

Operator and shareholder incentives are different, but have a lot of overlap, so founders need to value the “tension” that exists between those two sides. So what should a founder expect from their investors? Ideally, nothing, says Goldberg.

“A healthy expectation of an entrepreneur is to have no help from their VCs. It is often not true, but it is a healthy expectation. You should not expect your VC to be a key actor in your success other than bringing capital,” he said.

Many VCs prove to be very useful though, opening doors and arranging key meetings, because of their networks and reputations.

“Good VCs are typically well regarded, networked, and want to offer this sort of help,” said Goldberg.

What VCs typically are not, however, are operators, and founders should not expect them to get actively involved in their business. They are door openers, and soundboards, and can help founders identify blind spots. The key thing from a founder perspective is to be teachable, and the best founders are willing and able to learn from their investors.

“They are eager to hear about their blindspots and can be helped with their blindspots. The founders that nearly always fail are the ones that are not teachable, and they won’t listen to people from outside. If they are not teachable they will most likely fail,” said Goldberg.

Entrepreneurs should educate themselves in corporate governance, and understand the difference between a shareholder hat, a board hat, and a management hat.

“A VC that sits on your board and disagrees with you is not interfering, they are doing their job,” said Goldberg.

Funded founders need to understand that, and understand how decisions are made in their newly-funded venture.

“As a founder taking in outside money, you are making a decision about who is going to have influence over the big decisions this company makes,” said Goldberg, making clear that the key thing that changes when you take on VC cash is accountability to outsiders.

“You’re always accountable to your customers, your staff and your management team, but accountability to outsiders starts to become a real thing. That means time in board meetings and discussions, reports and so on. You’re going to lose time. So you ideally need to choose investors that add more value than the cost of that time,” he said.

Later on, a founder’s focus will shift from finding product-market fit to actually scaling a company. This is when a second major shift - the first having been taking on the capital in the first place - takes place.

“Now, everything changes, not so much because of the VCs but because of the stage of the company’s life. A good VC will expect a company to be managed according to its lifecycle stage,” Goldberg said.

Founders will need to implement management systems and processes, and put in place better organisational structure, in order to avoid chaos.

“A good VC would expect you to start to bring structure to the management team, discipline to the management processes, and you start to operate more against a plan than against an agile rhythm,” said Goldberg.