Reid Hoffman, founder of LinkedIn, observed that an entrepreneur is someone who will jump off a cliff and assemble an airplane on the way down. This is certainly an impulse to which I can relate. I credit my father with sparking my entrepreneurial drive. He was a Holocaust refugee and survivor, who came to America, penniless, in 1949 and earned his master’s in engineering from MIT and PhD in applied physics from Harvard. He then started a successful high-technology company the old-fashioned way—living hand to mouth, operating with customer revenues only, and without benefit of any outside capital. Watching my immigrant father embrace entrepreneurship inspired in me a passion for the field and an unyielding belief in its power to effect change.

Armed with a “kitchen table” MBA, as well as the real thing from Harvard Business School, I set out many years ago on my own entrepreneurial journey. During the ten years I spent making my way as an entrepreneur and executive team member of two venture-backed start-ups—Upromise (which I co-founded in 2000) and Open Market (IPO 1996)—I interacted with and pitched to many VCs and became fascinated with the VC game. So, after a decade of scratching the entrepreneurial itch, I went over to the “other side” and became a VC myself. I joined a new VC firm, called Flybridge Capital Partners, that a couple of friends had just started.

I initially both revered and feared VCs as powerful, intimidating characters in possession of the one thing entrepreneurs are desperate to get access to: capital. As I spent more time with VCs as my partners and co-investors, I learned what made them tick and how entrepreneurs can be most effective in pitching them, managing a VC-led board of directors, and successfully navigating an exit.

I wrote this book to demystify the VC world for entrepreneurs, having seen both sides as an insider, and to help entrepreneurs level the playing field when pursuing venture capital so that they can secure the resources necessary to achieve their vision. In this book, I reveal industry insights drawn from my experience as a practicing VC. I also include the perspectives of partners from some of the leading VC firms around the world who were kind enough to divulge their own secrets about their approach to the business.

I was also fortunate enough to be able to convince some of today’s most successful entrepreneurs—including the founders of Constant Contact, LinkedIn, Sirtris, Twitter, Zynga, and others—to talk from their deep knowledge and experience about how to work with VCs to shape a young company and help it grow. The purpose of this book is to share the magic formula of how great entrepreneurs team with VCs to create valuable companies from raw start-up. Whether you are the next Mark Zuckerberg (the Harvard student who started Facebook) or Jim Barksdale (the seasoned Fortune 500 executive who became CEO of Netscape), Mastering the VC Game will provide you with an insider’s guide to the world of VC-backed company formation, growth, and exit.

In the book’s first two chapters, I will explore the psyche of the two protagonists in the start-up game: the entrepreneur and the VC. In Chapters 3 and 4, I turn to the process of raising money (“the pitch”) and negotiating the deal. Chapters 5 and 6 provide insight into the company-building process and the way entrepreneurs and VCs make money by selling their companies (“the exit”). After a profile of the VC business outside the United States in Chapter 7, I conclude with a few observations about the industry’s future direction.

I have written this book not only to share this knowledge so that others can pursue their dreams—and, if things go well, turn their investments into handsome returns—but also because I strongly believe in the positive impact the venture-backed start-up can have on our economy and our society as a whole.

VCs acting in concert with entrepreneurs function as an essential and powerful engine of the U.S. economy. In the forty years since the very first venture-backed start-up—Digital Equipment Corporation (DEC), which was founded by Ken Olsen with a $70,000 investment in 1959 and went public in 1968 with a market value of $37 million, a 528-fold return!—VCs have invested more than $441 billion in some 57,000 companies in the United States. More than 12 million people (about 12 percent of the U.S. workforce) now hold jobs and make careers at venture-backed companies, and those businesses have combined sales of $2.9 trillion or over 20 percent of the total business revenues in the United States. And the VC game has led to the creation of some of the most iconic of American companies: Amazon, Apple, eBay, Facebook, Google, LinkedIn, Microsoft, Staples, Starbucks, Twitter and YouTube.

The venture-capital-driven entrepreneurship model has also become one of America’s most influential and important exports. Increasingly, the venture-backed start-up is becoming a key driver of growth and innovation in countries around the world. In the rapidly developing countries, venture capital investment is spreading like wildfire—up from zero just a few years ago to $4 billion in China and nearly $1 billion in India in 2009, and those numbers are expected to grow rapidly in the next few years.

Both in the United States and abroad, the venture-backed start-up plays an important role beyond innovation and wealth creation: changing the world for the better. Entrepreneurs and VCs alike invest in dreams—from new sources of energy to curing cancer to revolutionizing education—that have the potential to benefit society as well as themselves. Although the majority of entrepreneurs do not go the VC route to raise money to fuel their businesses, for many reasons that we’ll discuss, all can benefit from learning how the VC-backed start-up formula works.

Over the next decade, hundreds of billions of dollars will be invested in new or young companies and it is critical that this capital be invested wisely. With the accelerating development of technology, widespread digitalization, broadband Internet, environmental and energy breakthroughs, and medical advancements, the stakes are getting higher and the potential for world-changing opportunities is greater than ever before. Mastering the VC Game will help entrepreneurs be more effective in financing and launching start-ups and in creating companies that benefit us all, while also providing insight into the critical role these enterprises play in the global economy.