In the episode of this week of the Download Strictlyvc Podcast, veteran VC Aileen Lee was direct about an important consequence of the recent boom and fall cycle: many companies trapped in Limbo not only struggle to recover their balance after collecting too much money in unsustainable valuations; They have also lost the champions that once supported them.
Lee was arguing how limited partners doubt criticizing the powerful fund managers, for fear that they are excluded from investing in those companies again. But she imagined something they would say if they could speak freely:
“Everyone wants to enter the X brand X, so they will never criticize them [for fear of repercussions] . . . They probably talk about us behind us [laughs]… but what they would say is [that] All the people who have [were] Hired in these risk companies during the era of ZIRP. . . They did a lot of shit investments ”and are now being coded, except that it is too late, Lee observed. “All [the LPs’] Basically, the money was only thrown by the drain because the people in the risk work did not stay enough to see if the companies succeeded. ”
It is not the fault of these newer investors, Lee continued. “Only a lot of people did not receive training and did not receive any tutoring or learning were given checkers, and many investments were made, and. . . There are many orphan companies, ”as a result.
But there is another reason why new companies are leaving their own devices “and I find this crazy,” Lee said; In many cases, companies have been orphaned by a more senior general “who directed the investment, which is still there [at the firm] But I stopped appearing at the meeting meetings. “
For certain companies, it has been happening for years at this time. No one made so much due diligence during the covid of funds, and the corner cut never stopped when it came to these same investments. But it is also a key reason why a growing number of companies is struggling to find external help with output strategies, and why LPS would be justified in expressing more frustration.
Like another VC for a long time, Jason Lemkin, He told this editor At the end of 2022, when VCS stopped appearing at the startup meetings that were losing impulse: “[S]Shouldn’t there be checks and balances? Millions and millions are invested by pension funds, universities, widows and orphans, and when it does not make any diligence on the road, and does not perform a continuous diligence at a meeting of the Board, it is annulled some of its fiduciary responsibilities with its LP, right?
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