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In this hebdomad ’s episode of theStrictlyVC Downloadpodcast , veteran VC Aileen Lee was direct about a major result of the recent godsend - and - bust round : Many companies cohere in limbo are n’t just contend to find their footing after lift too much money at unsustainable valuations ; they ’ve also lost the champions who once punt them .
Lee was discussing how modified partners hesitate to criticise herculean fund director , fearing they ’ll be keep out out from investing in those firms again . But she imagined one thing they ’d say if they could speak freely :
“ Everybody desire to get into X brand name fund , and so they never will criticize them [ for fear of repercussion ] … they believably spill about us behind our book binding [ laugh ] . … But what they would say is [ that ] all the the great unwashed who have [ were ] lease at these speculation firms during the ZIRP epoch … they made a bunch of crappy investing ” and now they are being elbowed out — except that it ’s too late , observed Lee . “ All [ the LPs ’ ] money basically just got confound down the drain because the multitude in the venture Job did n’t stick around long enough to see if the companies were successful . ”
It ’s not the fault of these newer investors , Lee continue . “ Just a net ton of the great unwashed did n’t get trained and did n’t get any mentorship or apprenticeship were given checkbook , and a lot of investments were made , and … there are a flock of orphan troupe , ” as a result .
But there ’s another reason startup are being leave to their own devices “ and I find this crazy , ” said Lee . In many cases , company have been orphaned by a more senior universal partner “ who led the investment — who is still there [ at the business firm ] but just check show up to the board coming together . ”
For sure companies , it ’s been happening for years at this spot . No one did as much due diligence during the go - go COVID era of funding , and the recess slip never quite stopped when it come to these same investment . But it ’s also a key understanding a growing act of companies are struggling to determine outside help with exit strategies and why LPs would be justify in sound more frustration .
As another longtime VC , Jason Lemkintold this editorin previous 2022 when VCs first hold on showing up at the control board meetings of startups that were lose momentum : “ [ S]houldn’t there be substantiation and Libra the Balance ? gazillion and millions are empower by pension funds and universities and widows and orphans , and when you do n’t do any diligence on the way in , and you do n’t do continual diligence at a control panel meeting , you ’re kind of abrogating some of your fiducial responsibilities to your LPs , good ? ”
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contain outStrictlyVC Downloadweekly ; new episodes amount out every Tuesday .
