| This is less about founders not tying their startup to their identity, and more about the exponential growth of VCs and the power they wield over non-leveraged founders. Take a first time founder for example. You’ve been working on an idea for a while. You’re just now getting traction. You likely don’t make much, if anything at all. Either because you are pre revenue, or you’re putting everything back into the company. Now, a VC comes by and says I’ll take 20% of your company in exchange for $2 million. Another VC comes by and says I’ll take 20% for $2.5m. And so on. The founder now has a hard decision. Do you take the money, grow the company A LOT faster and be able to pay yourself a salary? Or, do you continue to grind away, hoping the business grows organically, which could take 10-20 years? Do you even have enough savings to wait that long? Are you killing the business by not taking the money? Okay, so let’s say you take the money. If you’re a repeat founder you know what to do. Don’t do a priced round, or if you do, don’t create a board. If you do create a board ensure founders still have majority. Essentially put everything in place so you don’t get fucked. So the option for you to be replaced by a hired gun doesn’t even exist. This sounds reasonable right? Well most first time founders don’t even know you have to do these things. Or even if they do know they still might have zero leverage and take the money anyway, knowing they’ve relinquished some control. Knowing they will likely be replaced in 3-5 years. This is how VC works now. The leverage has shifted completely. |
I don't think this is entirely true, as always it varies by VC. Each person is different.
Also VCs as a category know that they cannot bully founders and overplay their hand too much because if founders perceive that they are about to be diluted into irrelevancy or replaced they still have these little weapons called constructive dividend and constructive salary that they can "pay" themselves in so many various forms that VCs will be left wondering what the hell happened.