A VC recounts how another firm threatened legal action against founders who chose a billion-dollar acquisition offer over their term sheet. The conflict was resolved only when the aggressive VC was reminded that their primary duty is to founders and that such behavior would destroy their firm's reputation.
To manage co-founder disputes, an effective VC strategy is to avoid taking sides early. Instead, VCs should act as objective investigators by interviewing the entire executive team to gather facts and understand the broader context before helping mediate a resolution.
For typical strategic disagreements like spending levels or planning, a VC's default stance should be to defer to the founder. This mindset fosters a good working relationship and acknowledges the founder's primary role, reserving investor override for critical issues like poor performance or integrity.