The bad VC behaviour

“A finance-person turned tech operator-person based in London” (probably a former VC who jumped ship) and without the balls to put a name to his opinions asks why founders don’t speak out about bad VC actors.

It is a rhetorical question, of course - we touched upon this before:

"These individuals will never be named publicly because this is a relationship business. Founders don’t want to burn bridges and investors are friends with each other. And deal sharing opportunities are more frequent and important than “that time I screwed a founder because I coronavirus panicked” situations. It is part of their job."

Another way to look at it would be that the equity sales event is episodic in a company’s life, it is not the main thing. It is rather a distraction and a sometimes necessary evil - once you’re done with it, you focus on the business, not on being friends with investors because you need to ask them for money. Investors are just one of the stakeholders in founders’ ecosystem together with customers, employees, suppliers and competitors.

And, listen, if you go to the market and the guy who sells you apples fucks you over, you just move on and find another guy who sells apples. It’s as simple as that. Changing their mind is not your problem, it is their problem - it is likely a benefit in disguise as you don’t want this kind of character in your company to begin with. It’s a test they failed, next.

And that is why the incentive of calling out the bad apples should come from the investment community rather from startup founders, as

a) this is investors’ industry and you are what your industry rep is.

I have yet to meet a founder who is happy and excited to start talking to investors for fundraising reasons. Anxious, stressed and freaked out are more appropriate attributes and there is a strong corellation between those and the industry rep.

b) investors usually work together and they can correct bad behaviour easily if they want to;

c) more often than not, investors cover each other asses;

d) bad investor behaviour is usually considered an “accident” by their peers, “there’s always a next deal”.

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