Andreessen Horowitz partner Scott Kupor explains some of the secrets revealed in his new book about the venture capital industry

Kupor spends an entire chapter explaining the different types of funding that are available to any entrepreneur, regardless of location. In fact, he said, most businesses aren't venture-backed at all.

He told Business Insider that this was the question that he gets the most because it is one of the biggest sources of tension between entrepreneurs and investors. If an entrepreneur doesn't understand the venture capital model, it can lead to miscommunication and to a failed relationship in the long run, he said.

"I'm just a big believer that, if you understand the motivations and incentives of different parties, you can learn the vocabulary, which, obviously I did want to make sure that was clear, but you need to understand the reason behind the vocabulary and why people do what they do," Kupor said.

Kupor said it's most helpful to not think of the term sheet — which lays out the terms of an investment —as a static piece of the venture capital equation.

Instead, each term serves its own, independent purpose, and could carry potential implications that only come into play down the line.

"It's so hard from an anecdote perspective to think about a term sheet negotiation because each is unique," Kupor said.

Instead, he gives readers an example term sheet and accompanying explanation to better illustrate what the process looks like from both the entrepreneur and investor side of things. This way, he said, readers better know what to look for to get the most out of their deal.

Kupor writes in his book that venture capital investors generally expect about half of their total investments to tank.

It's baked into the venture capital model of general partners and limited partners, Kupor wrote: Exceptional events like a blockbuster IPO or big-money acquisition offset the losses from other companies that don't do as well.

So what to do if an entrepreneur finds herself in the less fortunate half? Kupor says it's best to be honest with current and potential investors about the growth and financial health of the company to avoid "getting out ahead of her skis."

"Oftentimes we go into those conversations with the entrepreneur and I'm usually surprised by how many times the entrepreneur feels relieved having had this conversation where they're like, 'Hey, this just didn't work despite our best efforts,'" Kupor said. "It's just better for both of us to have that conversation."

Kupor said his overarching goal of publishing "The Secrets of Sand Hill Road" was both to educate entrepreneurs, but also try to correct the perceived power imbalance he said many entrepreneurs felt when meeting with some of Silicon Valley's biggest backers.

"It's not rocket science, and obviously people can learn it, but it's something that you as an entrepreneur maybe do one or two times in your career and we've done it thousands of times in the 10 years that we've been here and we'll do it thousands more," Kupor told Business Insider.

That inequality of experience leads many entrepreneurs to think that they aren't getting a fair deal because they are at a disadvantage, Kupor said. He wanted to give entrepreneurs a look into his world, the vocabulary that is tossed around at Andreessen Horowitz's Sand Hill Road office, and who he is accountable to in an effort to combat that perception and put some of the power back in the hands of the entrepreneurs.