4 ms·

The main reason not to block deals is that 1) this should not be a single-round game for VCs 2) people talk. If you block an exit in a way which angers founder

by rdl 11y ago

The main reason not to block deals is that 1) this should not be a single-round game for VCs 2) people talk. If you block an exit in a way which angers founders/employees, even if you have a higher expected return on that particular deal in doing that, you're now going to be "that fucking asshole VC who blocked our sale" every day until the company gets a 100x return above what the deal would have been (which is probably...never). Not only will the founders hate you forever (both your firm and you personally, the partner); employees of that firm will hate you, and anyone those founders/employees talk to. Also earlier-stage investors/angels in the deal will also likely hate you for being "that asshole late stage investor who tanked our deal." As a professional investor managing a large pool of other people's money, you probably have the greatest risk tolerance and most diversification of anyone involved in the deal. For employees, founders, and even angel investors, even a 2-5x exit, if it's the best/most likely thing, is probably going to be life-changing in a positive way.

jonesb6 11y ago
People do not bite the hand that feeds. How many stories have you read where the VCs get lambasted by founders and employees? Not many right? Remember it's a two way street. Sure maybe there is some incentive for VCs not to be ass holes. But there is equal incentive for founders (many of whom are serial entrepreneurs) to stay liked by the VC community at large. Final point: people with "fuck you money" as mentioned elsewhere in this thread, commonly don't give a fuck.
- rdl 11y ago
  People are much more willing to share information in private with their friends about which investors/vendors/employees/etc. are good/bad. "Hey, I want to talk with someone at Firm X, who is good?" "They are asshats, call me, this is why..." leads to impaired dealflow for Firm X.

by rdl 11y ago

jonesb6 11y ago

People do not bite the hand that feeds. How many stories have you read where the VCs get lambasted by founders and employees? Not many right? Remember it's a two way street. Sure maybe there is some incentive for VCs not to be ass holes. But there is equal incentive for founders (many of whom are serial entrepreneurs) to stay liked by the VC community at large. Final point: people with "fuck you money" as mentioned elsewhere in this thread, commonly don't give a fuck.

rdl 11y ago
People are much more willing to share information in private with their friends about which investors/vendors/employees/etc. are good/bad. "Hey, I want to talk with someone at Firm X, who is good?" "They are asshats, call me, this is why..." leads to impaired dealflow for Firm X.