Historically, internal conflicts or partner turnover in VC firms were seen as universally negative. Now, leading firms are becoming more transparent, inviting Limited Partners (LPs) into these discussions to act as sounding boards and provide best practices for resolution.
Deciding whether to invest more capital into a struggling portfolio company is a major point of conflict. The management team advocates strongly for the infusion, believing it can turn things around. However, investor experience shows that such 'bridge' rounds are rarely successful, making it a difficult decision.
A frequent conflict arises between cautious VCs who advise raising excess capital and optimistic founders who underestimate their needs. This misalignment often leads to companies running out of money, a preventable failure mode that veteran VCs have seen repeat for decades, especially when capital is tight.