VC Aileen Lee underlines how the wider investor exodus aggravates misfortunes for unicorn companies
In the episode of this week of Download strictlyVC Podcast, the veteran of the VC Aileen Lee was directly on a major consequence of the recent Boom and Boust cycle: many companies stuck in Limbs have not only struggled to return to their foot after having collected too much money for unbearable assessments; They also lost the champions that have supported them.
Lee discussed how limited partners hesitate to criticize powerful fund managers, fearing that they are excluded from investing it again in these companies. But she imagined something they would say if they could speak freely:
“Everyone wants to enter the brand X, and therefore they will never criticize them [for fear of repercussions] . . . They probably talk about us behind our back [laughs]… but what they would say is [that] All the people who have [were] Hired in these venture capital companies during the Zirp era. . . They have made a bunch of shitty investments “and now they are sunk – except it is too late, observed Lee. “All [the LPs’] The money is mainly thrown into the sewers because people in venture capital jobs did not stay long enough to see if the companies have succeeded. »»
This is not the fault of these new investors, continued Lee. “A ton of people have not been trained and received no mentorship or learning received checkmen, and many investments have been made, and. . . There are a lot of orphaned businesses, ”as a result.
But there is another reason why startups are left to their own devices “and I find it crazy,” said Lee; In many cases, companies have been orphans by a more senior general partner “who led the investment – which is still there [at the firm] But I just stopped running at the meetings of the Board of Directors. »»
This has been happening for years at this stage. No one has made so much reasonable diligence during the financing era of Go-Go Covid, and the corner cup has never been completely arrested with regard to these same investments. But this is also a key reason why many companies find it difficult to find an external help to output strategies, and why LP would be justified to express more frustration.
Like another longtime VC, Jason Lemkin, Tell this editor At the end of 2022, when VCS ceased for the first time to run at the meetings of the board of directors of startups which lost momentum: “[S]Shouldn’t there be checks and counterweights? Millions and millions are invested by retirement funds and universities and widows and orphans, and when you do no diligence on the way, and you do not make a continuous diligence during a meeting of the board of directors, you somehow repeal some of your fiduciary responsibilities towards your LPS, right? “”
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