In this weekly episode of The Strictlyvc download Podcast, veteran VC Aileen Lee was immediate for an important consequence of the recent BOOM-AND-BUST Circle: Many companies that have stuck in the vacuum are not simply struggling to regain their base after raising too much money in unsustainable valuations. They have also lost the champions who once supported them.
Lee discussed how limited partners are hesitant to criticize powerful capital administrators, fearing that they would close from investing in these businesses again. But he imagined one thing they would say if they could talk freely:
“Everyone wants to get into the funder of brand X and so they will never criticize them [for fear of repercussions] . . . They probably talk about us behind our backs [laughs]… but what they would say is [that] all the people who have [were] hired in these business businesses during the Zirp era. . . They made a bundle of miserable investments “and now they are hugged – except that it is too late, Lee observed.” ALL [the LPs’] The money was basically just jumped under the sewage because people in business jobs didn’t stay long to see if the companies were successful. ”
It is not the mistake of these younger investors, Lee continued. “Only one ton of people was not trained and received no guidance or apprenticeships received check books and made a lot of investment and. There are many orphaned companies,” as a result.
But there is another reason that the newly formed businesses remain on their own devices “and I find it crazy,” Lee said. In many cases, companies have orphaned by a higher general partner “who led the investment – who is still there [at the firm] But he just stopped appearing at the Board of Directors. ”
For some companies, for years at this point. No one did so much the due diligence during the era of Go-Go Covid funding, and the angle of cutting never stopped when it came to the same investment. But it is also a key reason why a growing number of companies are struggling to find out of exit strategies and why LPS will be justified to express more frustration.
As another long -term VC, Jason Lemkin told the author at the end of 2022 when VCS first stopped appearing at meetings of the Board of Directors of the newly established businesses who lost dynamic: “[S]We couldn’t have checks and balances? Millions and millions are invested by retirement funds and universities and widows and orphans, and when you do no diligence on the road and do not constantly care at a Board of Directors meeting, do you abolish some of your trust responsibilities in your LPS?
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