In the episode this week Download Strictlyvc Podcast, VC VC Aileen Lee, was directly with a significant consequence of the recent Boom and Bustu series: many companies got stuck in the abyss, not only fought for recovery of position after collecting too much money on unbalanced valuations; They also lost the masters who once supported them.
Lee talked about how the partners of the limited partners hesitate to criticize the powerful managers of the fund, fearing that they might be cut off from investing in these companies again. But she imagined one thing they might say if they might speak freely:
“Everyone wants to get to the X brand fund, so they never criticize them [for fear of repercussions] . . They probably talk about us behind us [laughs]…. But what they would say [that] All people who have [were] Employed in these companies Venture in the Era of ZIRP. . . They made several shit investments, “and now they are elbows – except that it is too late, Lee noticed. “All [the LPs’] The money was basically simply thrown out, because people from the work of the undertaking did not remain long enough to see if the companies were successful. “
Lee is not the fault of those newer investors. “Only a lot of people have not been trained and did not receive any mentoring or internship, as well as many investments and. As a result, there are many orphaned companies. ”
But there is another excuse why the startups are left on their very own devices “and I think it is crazy,” said Lee; In many cases, the companies were orphaned by the senior general partner “who was conducting the investment – which is still there [at the firm] But he just stopped appearing at the board meetings. “
This has been happening for some companies for years. Nobody had major care during the financing era with Covid, and the corner cut never stopped when it involves the same investments. But this is also a key reason why the growing variety of companies tries to search out external help in exit strategies and why LPS could be justified in expressing greater frustration.
As one other many years of VC, Jason Lemkin, told this editor at the end of 2022, when VC for the first time ceased to seem at startup meetings that lose their shoot: “[S]Wouldn’t there be controls and balances? Millions and millions are invested by pension funds, universities, widows and orphans, and when you do not perform any diligence on the way, and you do not perform constant diligence at a meeting of the board, in a sense you discourage your trust duties against LPS, right? “