11 ms·

You are right that it's not illegal because it's not within the scope of a company. What I meant is that the EEOC decided to draw a line, and aside from the "i

You are right that it's not illegal because it's not within the scope of a company. What I meant is that the EEOC decided to draw a line, and aside from the "in the context of a company" requirement, the behavior in the stories I've heard definitely crosses that line rather than just being an uncomfortable and sketchy situation. I would argue however, that because VC's are holding the money and entrepreneurs are trying to raise, it might not be as bad as a boss/employee power dynamic, but the power is certainly held by the VC in the situation.

Alex3917 9y ago
> I would argue however, that because VC's are holding the money and entrepreneurs are trying to raise, it might not be as bad as a boss/employee power dynamic, but the power is certainly held by the VC in the situation. - The vast majority of highly successful companies don't raise venture. VCs need equity, entrepreneurs don't need money. - The vast majority of companies that raise VC don't succeed. - The vast majority of VC funds have lower than market returns. I think the real situation is more that a lot of inexperienced founders glom onto VCs because they think that not having money is what's keeping them from succeeding. There is also a common belief that the fact that VCs are predominantly male is creating a power imbalance that's keeping women from being more successful, despite the fact that the empirical evidence from other industries seemingly shows that there isn't much correlation between the sex of the gatekeepers and who they choose to back. E.g. LP is pretty gender balanced and most VCs are male, most literary agents and publishers are female but most published authors are male, etc. If there were more female VCs then it's possible that more women would get funded, but I think right now that theory is more of a truthclaim than anything else.
- mcbits 9y ago
  One person has $100 million that they'd like to turn into $1 billion. Another person has a plan that is likely to fail, but it's new territory with great potential. If no deal happens, one person still has $100 million while the other still has their unexecuted plan and hopefully a job or something. The power imbalance is pretty obvious in that kind of scenario. It's less of an imbalance if the entrepreneur is also wealthy and just raising money to share risk or build alliances. Point is, if you have multiple millions of dollars, "do nothing" is always on the table, which isn't so for many founders.
  - Alex3917 9y ago
    > If no deal happens, one person still has $100 million while the other still has their unexecuted plan and hopefully a job or something. The power imbalance is pretty obvious in that kind of scenario. I don't see any power imbalance that exists within the relationship here. Compare this with the laws that prevent a therapist from dating a client, which are in place because one party can take advantage of the other or blackmail them or have them involuntarily committed. That's a power imbalance. I also think this is a very orientalist view of the industry. How many founders actually raise institutional money off just a deck each year, who don't otherwise have the skills to earn a lot of money consulting or whatever? I'm not trying to defend the behavior here in any way, I just think that the reason why it's wrong for a VC to aggressively proposition a founder or whatever is different than, for example, what makes it wrong for an employer to have a relationship with an employee.

Alex3917 9y ago

> I would argue however, that because VC's are holding the money and entrepreneurs are trying to raise, it might not be as bad as a boss/employee power dynamic, but the power is certainly held by the VC in the situation. - The vast majority of highly successful companies don't raise venture. VCs need equity, entrepreneurs don't need money. - The vast majority of companies that raise VC don't succeed. - The vast majority of VC funds have lower than market returns. I think the real situation is more that a lot of inexperienced founders glom onto VCs because they think that not having money is what's keeping them from succeeding. There is also a common belief that the fact that VCs are predominantly male is creating a power imbalance that's keeping women from being more successful, despite the fact that the empirical evidence from other industries seemingly shows that there isn't much correlation between the sex of the gatekeepers and who they choose to back. E.g. LP is pretty gender balanced and most VCs are male, most literary agents and publishers are female but most published authors are male, etc. If there were more female VCs then it's possible that more women would get funded, but I think right now that theory is more of a truthclaim than anything else.

mcbits 9y ago
One person has $100 million that they'd like to turn into $1 billion. Another person has a plan that is likely to fail, but it's new territory with great potential. If no deal happens, one person still has $100 million while the other still has their unexecuted plan and hopefully a job or something. The power imbalance is pretty obvious in that kind of scenario. It's less of an imbalance if the entrepreneur is also wealthy and just raising money to share risk or build alliances. Point is, if you have multiple millions of dollars, "do nothing" is always on the table, which isn't so for many founders.
- Alex3917 9y ago
  > If no deal happens, one person still has $100 million while the other still has their unexecuted plan and hopefully a job or something. The power imbalance is pretty obvious in that kind of scenario. I don't see any power imbalance that exists within the relationship here. Compare this with the laws that prevent a therapist from dating a client, which are in place because one party can take advantage of the other or blackmail them or have them involuntarily committed. That's a power imbalance. I also think this is a very orientalist view of the industry. How many founders actually raise institutional money off just a deck each year, who don't otherwise have the skills to earn a lot of money consulting or whatever? I'm not trying to defend the behavior here in any way, I just think that the reason why it's wrong for a VC to aggressively proposition a founder or whatever is different than, for example, what makes it wrong for an employer to have a relationship with an employee.