VCs are looking to find the next Google, Facebook, etc. when it’s just a small company, desperate for cash, lean on people with experience of playing in the “big leagues,” and willing to sell large percents of the company’s stock fairly cheaply. They are looking to get many times their initial investment within a couple of years, so they push the companies they invest in to make decisions that benefit short term liklihood that it will be bought out vs. the long term health of the business. Often they will supply contacts and talent that can help take a company from a garage-run operation to an IPO on the NYSE.
VC’s know that most of their investments will fail, but good VCs will pick big winners frequently enough that the gains from those projects far ought weigh the losses from other failed companies.