Given that Fred Wilson (the blog author) is a renowned VC with 30+ years experience and dozens of famous investments … him saying it is the citation you’re looking for.
It’d be like you asking for a citation when Michael Jordan makes a comment about the game of basketball :)
Fred Wilson is also financially incentivized to make you believe that he has your best interests at heart. This is no different from a monorail salesman telling you need a monorail, because he sold them to Brockway, Ogdenville, and North Haverbrook, and by gum! That put them on the map!
I'd rather hear from the people that took the investment, especially the ones that crashed and burned.
Fred is explicitly stating that it's good for a business to get new investors, and to not just keep taking money from the existing investors. That's the exact opposite of what a typical VC would tell you. When new investors come into a company, the existing VC gets diluted.
> If a VC went from owning 20% of a company to now own 10% - how is that good for the VC?
Because that's not all that happens. The company also has a bunch more cash which means it's worth more.
You own less of a bigger pie but the actual value of your slice shouldn't change.
If you have 10 out of 100 shares of a company and it has a $10m pre-money valuation, your share of the company is worth $1m.
Now the company raises $2m. The new investors get somewhere between 16 and 20 (newly issued, dilutive shares). Now you have 10 out of 116 - 120 shares. 8.3% - 8.5% of a company worth $12m ($10m + the $2m in cash). Which puts the value of your shares right around your original $1m.
Except now the company has all this cash as well, so you're probably better off.
And not unimportantly: more people whose problem it is if things go South and then one of those might provide a solution acceptable to the remainder or there may be more people to spread the blame. Win win...
It’d be like you asking for a citation when Michael Jordan makes a comment about the game of basketball :)