Dear SaaStr: My VCs seem to have checked out. Should I do something about it?
VCs are checking out on struggling investments in droves now — but not all of them. Overall though, it seems to be at record levels. It may or may not be right. But it is natural. If a VC made 20 investments in the Peak of 2021, and 17 of them were overfunded startups without a plan today — it just makes sense to spend less time there.
As a top VC said to me recently, “I wish in my whole career I’d just make 2 of my investments, the two worth $10B+ today. I wish I’d make none of the rest of them.” In essence, a waste of a huge amount of time, energy and money on the rest. Tough to hear, but also — that’s VC math.
If growth has slowed and your VCs don’t seem to be responsive anymore, don’t care about board meetings, etc. — maybe that’s what you want. Maybe for prefer to just be left alone. If so, no problem.
When startups struggle, VCs get it. They are looking for founders (1) that are still truly giving it 110% and (2) that have a genuine plan to get back to real growth.
Signs neither is the case:
- investor updates stop
- “woe is me” language from founders (a little is OK, but only a little)
- founders moved to the beach, etc.
- no plan to at least do better than last quarter, i.e. rebuild growth bit-by-bit
What I see CEOs at struggling start-ups do:
– Go dark
– Hide
– Lash out
– Tweet about lots of things non-work
– Invest time on tiny expenses
– Argue internallyWhat should do:
– Be Present
– Be Honest
– Be the Rock
– Be Realistic/OptimisticYou just plain grow faster that way
— Jason ✨Be Kind✨ Lemkin 🇮🇱 (@jasonlk) November 25, 2023
Look maybe you don’t care if your investors check out. And maybe it’s not right for them to do so.
But what I can tell you is most top-tier VCs don’t check out on founders truly, really giving it 110% with a Plan. A real plan to get there. Because they know almost everyone goes through tougher times.
What they want to know is if you have what it takes to pull through the tougher times, for real.
If not? You might not hear any complaints, especially if you aren’t truly running out of money. There’s not much VCs can do, after all, in most cases. The money’s been invested. In fact, they may have quietly partially written down the investment at 12/31 of last year.
So you’ll just see — quiet disengagement.
A related post here:
(call me image from here)
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Jason Lemkin, Khareem Sudlow
