#3 is insane, if for no other reason than the VC is signaling that he’s likely going to try and do the same thing to you some day… even if you were totally willing to screw over your team, why would you ever get involved with that VC given you’ll then have to watch your back until the end of time?
I think a lot of people fail to recognize that they're the next target, or convince themselves they're special in some way that makes them immune. It's like when someone knowingly participates in an affair and tells themselves "Sure, they're cheating on their current partner to be with me, but after they break things off I know we'll be together forever!"
Because if you get involved with most VCs, you will then have to watch your back until the end of time.
None of those "worst experiences" seem all that unusual to me (though nobody will say #1 out loud anymore until after they've invested), and #3 is completely in character for Vinod.
Because rich and powerful people also have massive egos to go with their power and money. Some of them will find your rejection a personal attack and try to actively sabotage you. Not all VCs are like that, but there are enough of them that you need to be careful about how you handle the situation.
As with all things, the horror stories just get the most attention. People love to rage. There are plenty of boring (good, even!) VCs out there. They just work more quietly, professionally.
I'll share a story, but its about a close friend and not me so I won't name any explicit actors and I'm going to round out the numbers. You either trust me or you don't, but this is a very direct relationship I have to both the founder and VC.
The story is this: the founder started their company outside of SV, so the lawyers weren't super familiar with startups and messed up the initial incorporation and stock plan stuff (actually super common: use Stripe Atlas or pay a startup-aware lawyer!). Went under the radar through years. This company ended up being bought for nearly $1B (with a B) after many rounds and a large board.
During the legal work to close the acquisition, they found out this messed up stock plan. Without going into the details, the effect was that instead of taking home $200M, the founder would take home ~$75M. The mistake the lawyer made almost a decade earlier was about to cost him $125M.
Most of the board basically said "too bad so sad, law is law." But one VC (the one I know, the one I'm talking about) basically strong armed and politicked the whole thing and eventually convinced everyone around the table to give up an equal share of their own holdings to make the founder whole.
Letter to the law: they didn't have to.
Spirit of being founder friendly: this VC went to bat hard and got everyone to yield to make things "right."
Also, look, you might argue $75M vs $200M is just "rich vs rich." Who cares? Sure. That's not the point.
You don't hear about stuff like this because honestly its not a big enough deal and feel good stories get way less clicks than pitchfork stories.
The non-horror stories are usually pretty boring: VC heard the pitch, then either passed politely or wanted to be part of the round. If they joined, they wrote a check and wanted updates.
The VC landscape has changed a lot since some of these stories happened. Many years ago, there were few VCs and even good companies had a hard time getting funding. This created weird environments with some VCs raised funds and then liked having companies crawl to them to beg for the money.
There are still some VCs like that, but there has been an explosion of VC funds and money. Most VCs know they need to work hard to earn the trust of founders that they want to invest in. Leaving a bad impression could mean you're left out of the next round if you want it.
This goes against the popular idea of VCs, but most VCs I've worked with are actually pretty boring, normal, nice people.
The best possible case is that you get a cash infusion now in exchange for giving up a huge percentage of your future revenue and control of the company.
Casey Aylward from Accel has been mentioned in all void0 company posts. So she must have been very useful for the founder. (I don't have any insider information about void0, I've met her a few times and she is amazing)
The first I heard of Cloudflare was a recommendation from someone who used to DDoS websites (and yes they've been arrested for related crimes, long story), and I thought "what the heck is Cloudflare" then over the coming years, I kept seeing other friends using it. It's really interesting that Cloudflare was able to pop into a market that Akamai could have snagged for themselves or outright tried to buy out Cloudflare.
It's a bit crazy in hindsight that companies would have avoided investing, considering this is a space someone like Akamai occupied, and clearly there is value in this space. It's incredible to see how Cloudflare has grown over the years, kind of happy they grew as much as they did, a bit surprised by some of those VC nightmare scenarios.
Well he did retweet another tweet that kickstarted the convo, very possible he saw that tweet, said to himself "I have some of these to share!" and then proceeded to... do so.
I could write a book with the horror stories I have of VC and LP behavior, and some of the wild stuff I’ve either been asked to do, verified others were asked to do or say it’s just totally unhinged.
I don’t know if Angel investing groups are really still around like they were in there 2010s but the variance in the types of insanity and weirdness for those groups is really unmatched.
Competence, intelligence, merit have little connection to wealth. Wealth at that level is attained through arguably unfair means, not from reward for hard work. Conversely, poor people are not poor as punishment for lack of intelligence or merit
None of those "worst experiences" seem all that unusual to me (though nobody will say #1 out loud anymore until after they've invested), and #3 is completely in character for Vinod.
I'll share a story, but its about a close friend and not me so I won't name any explicit actors and I'm going to round out the numbers. You either trust me or you don't, but this is a very direct relationship I have to both the founder and VC.
The story is this: the founder started their company outside of SV, so the lawyers weren't super familiar with startups and messed up the initial incorporation and stock plan stuff (actually super common: use Stripe Atlas or pay a startup-aware lawyer!). Went under the radar through years. This company ended up being bought for nearly $1B (with a B) after many rounds and a large board.
During the legal work to close the acquisition, they found out this messed up stock plan. Without going into the details, the effect was that instead of taking home $200M, the founder would take home ~$75M. The mistake the lawyer made almost a decade earlier was about to cost him $125M.
Most of the board basically said "too bad so sad, law is law." But one VC (the one I know, the one I'm talking about) basically strong armed and politicked the whole thing and eventually convinced everyone around the table to give up an equal share of their own holdings to make the founder whole.
Letter to the law: they didn't have to.
Spirit of being founder friendly: this VC went to bat hard and got everyone to yield to make things "right."
Also, look, you might argue $75M vs $200M is just "rich vs rich." Who cares? Sure. That's not the point.
You don't hear about stuff like this because honestly its not a big enough deal and feel good stories get way less clicks than pitchfork stories.
The VC landscape has changed a lot since some of these stories happened. Many years ago, there were few VCs and even good companies had a hard time getting funding. This created weird environments with some VCs raised funds and then liked having companies crawl to them to beg for the money.
There are still some VCs like that, but there has been an explosion of VC funds and money. Most VCs know they need to work hard to earn the trust of founders that they want to invest in. Leaving a bad impression could mean you're left out of the next round if you want it.
This goes against the popular idea of VCs, but most VCs I've worked with are actually pretty boring, normal, nice people.
https://voidzero.dev/posts/voidzero-cloudflare#acknowledgeme...
It's a bit crazy in hindsight that companies would have avoided investing, considering this is a space someone like Akamai occupied, and clearly there is value in this space. It's incredible to see how Cloudflare has grown over the years, kind of happy they grew as much as they did, a bit surprised by some of those VC nightmare scenarios.
source: most of the bullshit i surface up nowadays
I don’t know if Angel investing groups are really still around like they were in there 2010s but the variance in the types of insanity and weirdness for those groups is really unmatched.
Is it the money that makes them stupid or smth?