Why Founders Hate VC's
Alex J. Seleska
CEO @ Sparton Capital | Investor | Pre-Seed to Series B | The Sparton Academy | Venture Builder | Consultancy | Driving Growth | M&A ????????
The venture capital space has a problem.
That problem? Most founders hate VCs.
But why do they hate them?
Well, there are any number of reasons that people might suspect. People typically dislike those who hold sway over them, especially when money is involved. They resent the gatekeepers who decide whose ideas are worthy of investment and whose aren’t. They bristle at the arrogance, the smugness of those who hold the purse strings and enjoy the power that comes with it.
But the core issue is this: They are not entrepreneurs and they do not understand entrepreneurs.
Who Works at VCs?
Before I dive deeper, let me clarify: not ALL VCs are guilty of this. There are exceptions, especially among smaller, founder-led funds or those focused on specific niches. But an increasing number of VCs, particularly in established startup hubs like London, San Francisco, New York, and Hong Kong, are deeply disconnected from the entrepreneurial journey.
The issue lies in the hiring practices of VC firms. Their associates, partners, and sometimes even principals are rarely entrepreneurs themselves. Many have never worked in a startup, much less founded a company. They’ve never felt the existential dread of managing cash flow, navigating late invoices, motivating a team, or grappling with the sense of impending doom that haunts most entrepreneurs.
Without this experience, they lack the fundamental understanding required to assess what makes a great founder or a viable startup. They rely on cookie-cutter evaluation forms, asking the same uninspired questions, and often focus on reasons to reject rather than reasons to invest. After all, their jobs are safe as long as they avoid risk—and nothing is riskier than backing a wild, unproven idea.
How Does This Manifest?
The clearest symptom of this disconnect is an almost non-existent appetite for risk. Ironically, this is antithetical to the very purpose of venture capital: taking risks on unproven ideas with outsized potential rewards.
VC associates often play it safe because they’re not investing their own money. They receive their 2% management fee regardless of outcomes, and the 10-year investment horizon means many won’t even be around when the results come in. Consequently, funds skew heavily toward later-stage investments—the safer bets.
This approach dilutes potential returns. Consider these two scenarios:
While the latter is less risky, it’s also less lucrative. True venture capital thrives on finding and backing winners early. The traditional model—expecting 95% of investments to fail, 5% to succeed, and 2% to deliver massive returns—has been diluted by this risk-averse mentality.
A Lack of Imagination
Now, let’s get personal.
Too many VCs lack creativity or an entrepreneurial mindset. They’re often finance grads from elite universities, armed with impressive degrees but devoid of the real-world experience needed to evaluate or support startups.
Finance knowledge isn’t entrepreneurship. Running spreadsheets isn’t the same as running a business. It doesn’t teach you how to pivot when things go wrong, inspire a team, or transform a vision into reality.
This lack of imagination leads to predictable and uninspired decisions. Many VCs chase “safe” numbers rather than bold ideas. They’ll throw millions at startups with inflated metrics and trendy pitches, even if the underlying business model is flawed. Meanwhile, genuinely innovative ideas often struggle to get meetings, let alone funding.
WeWork’s meteoric rise and fall is a prime example of this misjudgment. The numbers looked great on paper, but the underlying leadership and business fundamentals were shaky. On the flip side, countless groundbreaking ideas have languished, overlooked by unimaginative investors.
What Can Be Done?
If venture capital is to regain its relevance, it must reconnect with its roots:
Why Founders Hate VCs
Founders hate VCs because too many of them are out of touch with the realities of building a business. They prioritize safety over vision, metrics over imagination, and their own job security over the bold bets that drive innovation.
Conclusion
The venture capital world is at a crossroads. It can continue down its current path, playing it safe and becoming increasingly irrelevant, or it can rediscover its purpose: backing bold ideas and the audacious founders who dare to dream them up.
The question is, will VCs have the courage to change? Or will they continue to be the gatekeepers founders love to hate?
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