Why don’t VCs say “My bad” more often?
On the basketball court you always see players pointing to themselves and saying, “my bad.” You don’t see that so much around fundraising for start-ups.
At the beginning of May Sam posted a reminder to YC founders about ethics — and I think it is spot on. It sets expectations and helps founders know when to say, “My bad.” However, as the current batch gets close to the 1/2 way point and starts to think about demo day, I think a similar statement on investor ethics would be awesome and could help founders know when an investor should say, “my bad” — even if they don’t.
As a founder, I know I was under-informed when it came to starting a partnership with an investor and I paid a terrible price. As it happened, I felt like most of it was “my bad” but knowing what I know now, I see a bunch of places where my investors should have taken responsibility.
I don’t think my founder experience is unique.
Today I see the burden of creating an open, honest and ethical relationship as squarely on my shoulders. Founders have to reciprocate, but VC’s need to lead in this respect.
I have chosen to be a VC. This means I build partnerships for a living rather than building companies. That is the core output of my job. As a VC, I know the system, the nuance of negotiations, what is best practice, the grey areas and the black hat stuff that you can, but should not do. As the more experienced person around investment mechanics, if something goes wrong, I take responsibility for the majority (maybe all) of the problems.
The market for startup financing is more and more transparent, and founders have access to much more information than a decade ago when I was knocking on doors on Sand Hill Road. But, even with more information about fundraising available, if something feels “off” in my engagement with a founder, I think it is far more likely an honest mistake due to inexperience or miscommunication than malice or actual bad behavior.
A clear statement of expectations could help founders and VCs create more open, honest and healthy partnerships and say “my bad” a little more and point fingers a little less.
This would be a good thing.