Investment Without Injury VC investors should know when to limit their involvement--and entrepreneurs should stand firm on where to draw the line.

An entrepreneur reminded me recently of something I once said that stuck with him: "A good VC needs to know when to get out of the way." The comment was in reference to a fast-growing company that was making a ton of operational decisions in its early stages. We had a tight investor group that trusted the entrepreneurs, and rather than get in the middle of numerous operational decisions--including hiring and salary, office space, employee parking--we spent our time talking at a strategic level and guiding the business.

As a result, the business grew much faster than if we had micromanaged the operation. Sure, mistakes were made--but on the whole, the velocity of the business was much greater than if we'd involved ourselves.

There's a cliché that when a company is successful, it's because of the entrepreneurs, and when a company fails, it's because of the investors or the board. Self-aware investors know that they are supporting characters in the entrepreneurial process, but many VC and angel investors don't. As a result, they become involved in areas where they add nothing, stall the company's progress with slow decision-making and subject the entrepreneurs and management team to endless extra work.