Member-only story
10 Unwritten Rules for Venture Savvy Founders
Because there’s no user manual for venture capital.
I’m old enough to remember when VC firms did not compete to see who is the most founder friendly. The firm where I work was explicitly started with the mission of being a founder-aligned VC because this didn’t always exist. Overall, this has been a very welcome development for founders. Luckily, these days there are fewer trap doors for founders and slow-release poison pills in term sheets. But they do sometimes exist and from my viewpoint as a former founder, venture dynamics are still tricky for founders to navigate, at least until they’ve been through multiple rounds of funding and sometimes an acquisition — whether successful or unrealized.
In my ongoing quest to make VC more transparent, here are some guidelines for founders on some of these dynamics, and I hope that it will help drive better outcomes for you and your team.
Rule 1: Raising more money does NOT translate into building a more valuable startup.
We have the receipts here (in the form of post-IPO outcomes for a set of startups compared with how much cash they raised). In fact, if you raise too much money, you may increase the chances of a binary outcome, “hitting the wall” when you get…
