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Katelin Holloway notes an ironic VC behavior: investors are often absent during the difficult early grind but flock to a company once it's clearly succeeding. They want to be associated with the “rocket ship,” but this is the moment founders need their help the least. True value is delivered during the struggle.
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Echoing the Hippocratic Oath, a venture investor's primary job with a high-performing company is to stay out of the way and not disrupt its momentum. While providing resources for talent, capital, and strategy is valuable, it's secondary to the core principle of not interfering with a team that is already executing successfully.
Value-add isn't a pitch deck slide. Truly helpful investors are either former operators who can empathize with the 0-to-1 struggle, or they actively help you get your first customers. They are the first call in a crisis or the ones who will vouch for you on a reference call when you have no other credibility.
The abundance of capital has shifted the VC mindset from serving founders over a decade to simply "winning" the next hot deal. This transactional approach is misaligned with what founders truly need: a committed, long-term partner who puts the company first.
In a market with extreme growth outliers, the opportunity cost of supporting a slower-moving company is immense. This pressure causes both investors and founders to quit on ventures much earlier, seeking to redeploy capital and time into potential breakout hits.
VCs can handle pivots and financial struggles. Their primary nightmare is a founder who quits. A startup's ultimate survival hinges on the founder's psychological resilience and refusal to give up, not just market or product risk.
While it's easy to stop funding obviously failing companies, the most difficult decisions involve startups that are doing okay but are not on a trajectory for venture-scale returns. The emotional challenge for VCs is balancing their supportive, founder-friendly role with the tough-minded discipline required for their LPs.
The hardest transition from entrepreneur to investor is curbing the instinct to solve problems and imagine "what could be." The best venture deals aren't about fixing a company but finding teams already on a trajectory to succeed, then helping change the slope of that success line on the margin.
With efficient discovery from accelerators like YC, the main opportunity for smaller VCs is to invest when a promising company stumbles or its re-acceleration is non-obvious. These "glitches in the matrix," where progress is non-linear, are moments where mega-funds might look away, creating an opening.
The journey of any successful startup is not a straight line; it inevitably includes multiple moments where the company faces existential threats. Understanding and normalizing this reality from the beginning helps founders and investors frame their relationship as a long-term partnership built to withstand extreme volatility.
VCs are incentivized to deploy large amounts of capital. However, the best companies often have strong fundamentals, are capital-efficient, or even profitable, and thus don't need to raise money. This creates a challenging dynamic where the best investments, like Sequoia's investment in Zoom, are the hardest to get into.
