BRAVE: VC Ghosting, Portfolio Math & The Brutal Truth About Startup Survival - E667
episode
BRAVE Southeast Asia Tech: Singapore, Indonesia, Vietnam, Philippines, Thailand & Malaysia Startups, Founders & Venture Capital VC (English)
18 min
1 speaker
5 chapters
transcribed 13 days ago
Transcript
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Transcript generated automatically by AI and may contain errors.
How do VCs continue to evaluate startups after the initial check?
Secondary markets can be very, very opaque. There's a lot of middlemen and brokers. There's a bit of like a Wild Wild West. But there's actually a lot of demand to buy these shares. But you know, there's all kinds of problems because you it may not be above board. Uh, you know, people may bail or people may pledge that. shares and sell it to multiple people actually has been known to happen. Welcome to Brave. Learn from Southeast Asia's best tech leaders. Build the future, learn from our past, and stay human in between. No BS on Success. I'm Jeremy O, Venture Capitalist, Sarah Founder, Harvard MBA, Science Fiction Nerd, and Dad of Two Daughters. Every week, we debate startup news, interview change makers, answer listener questions, and share personal insights.
Join our movement of over 40,000 members and get transcripts, resources, and community at www.bravesea.com. Stay well and stay brave. For angels, because they're very small and minority shareholders, when the latest stage investors come in, the later stage investors will normally buy out the early stage investors or give an offer to buy out the early stage investors. And the reason why is because, for example, you need to clean up the cap table, because you need everybody's signature, for example, oftentimes to get documents done. So the more of these, you know, kind of like sub 1%, so like 0.5%, whatever it is. You know, if you can buy them out, it's less admin for the founders. So the founders like it in general.
Two is, you know, angels, they might want to do something like buy a house or do something else with the money and it's already been locked up for six, seven years. So waiting for another two, three, four, five, six, seven, eight years may be too long for them. So oftentimes there is uh effectively a buyout of these angels by LASTAY investors. So there's a good segue into the next section, which is exit management. So when we think about founders and startups and VCs, you must understand that VCs often are in two caps, right? They often think about two things, which is one is how do we add value? So this is like your board work, your strategy, your compliance, all the value add stuff. But a very underrated art is really the art of portfolio management, which is that even after your judgment of whether to put that first check, there will be actually multiple times that the VC will re-assure.
assess and say to themselves, okay, do I want to spend more time with this company? Are they on track? Are they off track? Because they have to allocate their own time, resources, and attention. And so you can imagine there's a little bit of yin and yang because you know you can imagine that if your startup If the VC after two years is have been asking for lots of help for the past two years, but after two years the VC is like, you know what? I don't think you're gonna make it. The VC can tell the head of recruitment and say, Please deprioritize this company because Even though you're helping them a lot. I don't think they're ever gonna make it. And so you need to save your time to help the companies that are going to be actual home runs.
And so this is actually a very kind of like brutal mechanic that most founders are not aware that even when they have been invested in, the partners continue to be judging them during this time frame. And it's very important because VC funds are always scoring in your hits, which is If I've invested in 20 companies or 40 companies, which ones are the home runs that are going to be able to return my portfolio more? Which ones do I want to support? Because They have a shot.
What is the “hidden VC scoreboard” and why do startups get re‑ranked each year?
Which ones do I want to delegate? Because you know I don't want to spend my time there. Or who am I going to ghost? They won't do anything so brutal as like, Hey, we deprioritized you. They won't say that out loud because It feels bad, it sounds bad. And you never know the startup might figure that shit out after three or four years. And suddenly take off a rocket ship. Then suddenly the VC will come back and say, Hey, we've always been supportive of you and we love you so much.
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Chapters
5 chapters
1
How do VCs continue to evaluate startups after the initial check?
0:00–3:17
2
What is the “hidden VC scoreboard” and why do startups get re‑ranked each year?
3:17–8:41
3
Why does the portfolio math mean most companies fail while a few generate 50× returns?
8:41–12:21
4
How does each new funding round reset a VC’s conviction in a startup?
12:21–16:03
5
What tensions arise between founder vision and board incentives during exits?
16:03–18:24
Speakers
1 identifiedMore from BRAVE Southeast Asia Tech: Singapore, Indonesia, Vietnam, Philippines, Thailand & Malaysia Startups, Founders & Venture Capital VC (English)
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