There’s some buzz going round right now precipitated by a guest post on Techcrunch this weekend by Tod Sacerdoti of Brightroll. Sacerdoti chose to coin a phrase of “Patzer Problem” to to described the sentiment that Mint’s ultimate acquisition by Intuit may not have fulfilled the objective of a “big” exit for some of its VC investors. Various other folks weighed in yesterday including Rob Hayes of First Round Capital (an investor in Mint) and Mark Suster of GRP Partners. I think Suster’s points about backing entrepreneurs (vs markets, products, etc) and the fact that the VC business is one built upon long term relationships both ring particularly true.

I find it rather unnecessary to belittle Aaron Patzer personally or Mint in the way the original post described. I for one take my hat off to Patzer and everyone involved with the company for taking on an incumbent like Quicken, innovating around a new revenue model for personal finance software, and rapidly building a company from nothing to $170M acquisition in about three years. No matter what your expectations or relative perceptions may be, that’s an awesome accomplishment.

I have literally no idea what dialogue Mint and its investors had at various stages of development, so I certainly won’t try to opine on what did or might have occurred in their specific case. But the underlying issue of goals and expectations is one worth examining, because a broad alignment here is one of the key factors in successful relationships between entrepreneurs and investors. Ask anyone who’s had parents or other family members help pay for their wedding… when you take other people’s money, for better or worse their expectations come with it.

I believe in a few simple precepts which both entrepreneurs and startup investors should strive for:

1. There’s a broad range of potential startup investors with different “bite size”, strategy, and outcome expectations. There’s no particular “right” model for VC, but entrepreneurs should familiarize themselves with different categories of investor prior to seeking funding.
2. Before committing to a funding path, entrepreneurs and investors should have a frank conversation about what they believe the company could accomplish and what each group hopes to achieve.
3. Entrepreneurs & investors who have meaningfully divergent expectations should part friends but not work together.
4. Where broadly aligned and proceeding with a funding round, entrepreneurs & investors should think about structuring the investment to reflect shared goals (size of round, terms, protective provisions, etc).
5. As companies continue to develop, entrepreneurs & investors should have a candid ongoing dialog to evaluate changing expectations and what the implications are.

For example, when we raised our Series A round for LinkedIn back in 2003 our CEO Reid Hoffman (my boss) had a conversation like #2 with Mark Kvamme who was planning to lead the investment for Sequoia Capital. We all believed we had a shot at building a large company, so the founding team of LinkedIn was prepared to agree to a structure which would essentially give Sequoia “extra” returns if we sold the company for a comparatively small amount (n.b. – basically a tiered liquidation preference which was high at low exit values and went away at higher values). Reid and all the LinkedIn investors have had a healthy dialogue over the years about whether or not to pursue additional funding, possible exit opportunities, and the like.

Even adhering to these precepts, it’s certainly possible for disagreements to occur whether between founders and investors, among different founders, or among different investors. But clearly both investors and entrepreneurs can use these guidelines to try to avoid situations where startups pursue the wrong funding path or an incompatible investment partner.