That isn't to say you should obsess with them; however, if the chances are higher that they'll help you build a better business than you probably should pursue them.
Back to reality. Any entrepreneur raising capital from a venture firm should recognize that venture capital returns over the past decade lag all of the major domestic stock indexes by a substantial margin. If you look at returns from even the most successful of funds, there's usually not a lot to be impressed by. In some cases, one or two investments account for most of the returns.
Why does this matter? Simple: it strongly suggests that the value-adds so many of the firms try to differentiate themselves with can only do so much to produce real value. If this wasn't the case, you'd expect all that special sauce of the top firms to ultimately be reflected in their returns, which again are generally unimpressive.
There is an excess of capital in venture capital today, and you have lots and lots of firms chasing deals. The wisest entrepreneurs who need funding will take advantage of this to raise capital on the most advantageous terms they can negotiate. Agreeing to less favorable terms based on the pedigree of the source of the funding is unlikely to confer any benefit.
That's not correct. The top funds have very high IRRs. For example, Foundry Group on slide 5: www.scribd.com/fullscreen/57221228 . I remember Marc Andreessen describing A16Z's first fund as returning >100% IRR. I'm sure SV Angel's is very high as well.
In some cases, one or two investments account for most of the returns.
That's not at odds with a fund being successful. Startup investing is inherently about finding outliers: http://www.paulgraham.com/swan.html . Its alright if the median investment returns nothing as long as an outlier can return the entire fund. You might disagree with an entrepreneur aligning herself with investors that have this sort of thesis, but it's not accurate to say that the top funds perform poorly as a result.
