A Cautionary Tale for Founders and Investors

A Cautionary Tale for Founders and Investors

In the complex ecosystem of venture and capital, one element often stands in the shadows, quietly positioning itself between the source of capital and the ventures that desperately need it—the middleman. These intermediaries, often glamorised as gatekeepers or facilitators, wield significant influence over the flow of capital. But before you hand them the reins to your entrepreneurial journey, it’s crucial to ask: Are they really worth the cost?

The Unlikely Gatekeepers

Let’s start with a harsh truth: Most middlemen have never built a business. They’ve never faced the sleepless nights agonising over payroll, nor have they tasted the euphoria of seeing a product they’ve nurtured succeed in the market. Despite their polished resumes and insider jargon, they fundamentally lack an understanding of the founder’s journey—the struggle, the sacrifices, the relentless pursuit of a vision.

So, how did they come to control the flow of capital? The answer is as perplexing as it is troubling. These middlemen, many of whom have never successfully built or exited a business, have somehow managed to position themselves as essential conduits in the entrepreneurial ecosystem. They have accumulated influence without wealth, authority without experience, and in many cases, power without responsibility.

The Two Faces of Middlemen

In my experience, there are two types of middlemen. The first type, though rare, is invaluable. These are individuals who genuinely understand the delicate balance between capital and the ventures into which it is deployed. They’ve taken the time to understand both the investor’s expectations and the founder’s challenges, often playing a crucial role in fostering successful partnerships. Their advice is rooted in real-world experience, and their value lies in their ability to align interests and facilitate growth. They are the architects of success, quietly making connections that allow both founders and investors to thrive.

But then there’s the second type, a far more common breed. These middlemen are motivated not by the success of the ventures they’re supposed to support, but by their own egos. They crave the proximity to wealth and power, using their positions not to create value, but to inflate their own sense of self-worth. For them, the role of middleman is less about facilitating meaningful connections and more about playing the game of influence. Information becomes their currency, traded not for the benefit of the founders or investors, but to serve their own interests.

The Perils of Ego-Driven Middlemen

Ego-driven middlemen are dangerous for several reasons. First and foremost, they lack loyalty. Their primary allegiance is to themselves, not to the founders they’re supposed to support or the investors they claim to serve. This lack of loyalty manifests in various ways—from steering founders towards deals that benefit them personally to withholding crucial information that could impact an investor’s decision.

These middlemen are masters of the art of self-preservation. They will go to great lengths to maintain their position within the echelons of wealth, even if it means compromising the very ventures they are supposed to help grow. Their advice is often tainted by self-interest, and their involvement can lead to misaligned partnerships, missed opportunities, and ultimately, failed ventures.

Vigilance is Key

Founders and investors must be vigilant. It’s not the middleman who creates value; it’s the synergy between a visionary founder and a discerning investor that makes the magic happen. The right investor-partner relationship can propel a startup to new heights, but the wrong middleman can derail even the most promising ventures.

Before engaging with a middleman, scrutinise their track record. Have they ever built a business? Do they have a genuine understanding of the entrepreneurial journey? Are they motivated by a desire to create value, or are they simply looking to bolster their own ego? These are the questions that need to be asked—and answered—before you entrust them with the future of your venture.

Conclusion

The role of the middleman in the venture capital ecosystem is a double-edged sword. While some can add tremendous value, others are merely self-serving actors playing a dangerous game of influence. Founders and investors must be discerning, recognising that the true magic of a successful venture lies not in the middleman, but in the partnership between capital and innovation.

In a world where everyone seems to be jockeying for position, beware of the middlemen who offer more smoke than substance. The stakes are too high to entrust your entrepreneurial journey to those who have never walked the path themselves.

Sukhi Bhullar

Co-founder & CEO of Skople, a Family Office backed Venture Studio | Co-Founder sparkRFx | Professional Investor | Venture Partner | Creator and Builder at heart | Proud father | LION

3 个月

Kieron Launder shared the following with me in a direct message. I thought it was a very simple yet powerful lense through which to think about differentiating the middlemen that provide value verses those that don't : (reposed with his permission :)) "Confidence in yourself allows you to focus externally, on others, giving, sharing ideas, connecting people (whether you are there or not) etc. while lack of confidence has you worrying about yourself, your position, being vulnerable etc."

回复

Another great article...Lack of loyalty may often be a lack of confidence that they are truly adding value and thus believe self interest trumps putting client(s) first, which is the only long term strategy.

Uzma khan

Freelance Community Builder | PR words | Content writer

3 个月

Sukhi, your insights into the challenges founders face when navigating the venture capital landscape are thought-provoking. It’s crucial to highlight the real value creators—the founders and investors who genuinely drive innovation and take on the risks. Exposing the motives of self-serving middlemen is a conversation worth having.

Ash Kumar

CEO @ IMRnext, developed & delivering the future of Wireless User Experience | Co-founder of Nvoke & MuraConnect | 3x Investor & business transformation leader | Harvard Business School Alumni | Multi strategy Investor

3 个月

Very well written Sukhi, I have seen both sides where middle man failing to create true value for the stakeholders and missing plenty of good opportunities due to some of the reasons you shared but I have also seen some of them going above and beyond to help and act swiftly for both parties… those who do a great job are self assured and have strong professional compass… Having said that that, those who truly shine are in exception than the norm in the industry of venture and capital

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