Entrepreneurs obviously need to spin their situation in as positive a light as possible, see all the chatter around the monitization of twitter as an example, but I doubt outright lies are going to be a winning strategy. (it may work for Jobs, see woz-atari story, but is it worth the risk?)

I think it's important for the Entrepreneur to understand that VCs lie all the time however, it is just their nature, despite how open they look, they're especially good at lies of omission and manipulation of fund performance.