Founder tales about VCs reflect a power shift
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"VCs behaving badly" has been the theme of tech Twitter over the past week, with founders sharing stories that ranged from amusing to ethically challenged.
Why it matters: This discourse reflects a deep shift in the startup ecosystem over the past couple decades — the move to "founder friendly" investing, even potentially at the expense of fiduciary duty to limited partners.
Catch up quick: Greg Isenberg kicked it off last Tuesday by recounting how a general partner at a top firm fell asleep for more than 30 minutes during a pitch meeting, and no one else in the room batted an eyelash.
- "I kept presenting my Series A slides to an unconscious man in a Herman Miller chair and somehow that was considered normal."
The big picture: Basic courtesy (i.e., staying awake) should always be a given, of course, but some of the replies had more entitled bite.
- Founders now hold the reputational cards, even when begging for term sheets, and everyone seems to know it.
Zoom in: Vinod Khosla, a venture capitalist who spans both eras, became embroiled after Cloudflare CEO Matthew Prince wrote that Khosla once suggested he fire his two co-founders and give Prince their shares. "I was so offended that we never spoke again," wrote Prince, who also took some aim at Sequoia Capital.
- Khosla responded by saying that Khosla Ventures never offered to invest, which he acknowledged was a mistake, after which Prince posted a term sheet from KV.
- Khosla hasn't publicly responded to Prince's receipts, but tells me via email: "Honestly totally forgot we issued them a TS. We've probably issued over a thousand since then. No harm meant whatsoever ... [But] wouldn't have offered him their equity; it would have gone back to the pool so he can hire additional co-founders."
- Khosla adds that founders are harmed when investors don't provide "honest feedback."
The bottom line: It's a founder's world and VCs are just living in it.
