What is the essential foundation of a strong founder-investor relationship?

Julio Vasconcellos · Sep 23, 2022

An institutional investor's job is to maximize returns and help the founder win, not to be the founder's friend or cheerleader, which requires being somewhat cutthroat and giving harsh but constructive feedback

Maximizing returns for investors is what ultimately maximizes the founder's outcome too, even when the process isn't pleasant

Scope: angels have more leeway to be friends and cheerleaders

21:05 20VC: Why Greed is the #1 Enemy of Venture Returns, Why Not Enough VCs Play to Win and Lessons from Scaling to $100M and 1,200 Employees and Then Cratering with Julio Vasconcellos, Founder @ Atlantico

Jack Altman · Nov 3, 2023

Founder investors' tougher feedback should be understood as kind rather than nice, and it serves founders better than agreeable feedback

Looking back, the people who did him justice told him things that sucked to hear on the day but were good long term; a customer who nods along and says keep building rather than admitting they aren't interested does you a great disservice

Scope: hopes the toughness comes from wanting founders to succeed rather than from callousness or low EQ

11:04 20VC Roundtable: Why Early Stage Founders Should Not be Investing, Why Great Founders Have Low EQ, How the Structure of VC Firms Will Change, Will Founder-Led Funds Compete with Sequoia & Is Investing a Team Sport?

Auren Hoffman · Nov 3, 2023

The right frame is long-term nice versus short-term nice, and good investors choose long-term nice

Analogy: not letting your kids eat ice cream for breakfast is short-term unkind but long-term kind

11:59 20VC Roundtable: Why Early Stage Founders Should Not be Investing, Why Great Founders Have Low EQ, How the Structure of VC Firms Will Change, Will Founder-Led Funds Compete with Sequoia & Is Investing a Team Sport?

Nigel Morris · May 24, 2021

Venture is not stock picking — you have to play the full ninety minutes, and the founders worth working with are the ones who want partners through the journey rather than money and to be left alone

What founders are attempting is point-nine-to-the-power-six hard, so they need partners and supporters to help them navigate it; it's a mutual mating process

Scope: describes QED's model and self-selection, not a universal prescription

18:38 20VC: Why Bundling Does Not Work, How The Best Founders Analyse Unit Economics, Why The Way We Approach Mental Health in Venture and Startups is Wrong with Nigel Morris, Co-Founder & Managing Partner @ QED Investors

Nabeel Hyatt · Apr 4, 2025

Founders should not accept a merely 'fine' or non-harmful VC; the goal should be an investor who is deeply engaged, emotionally invested, and does the detail work

You would never accept 'fine' from a VP of engineering, head of product or a spouse, so accepting mediocrity at the board level makes no sense; anyone entering a founder's orbit should be obsessed with the mission

Scope: if you genuinely can't find such an investor, a do-no-harm 'no-op' VC at a high price is an acceptable fallback; failing to find one is fine, but it shouldn't be the goal

24:00 20VC: Why To Win in AI, Investors Need to Change Their Approach | Why VC is Run by Principals and Associates and is a Broken System | The Bull Case for Anthropic & Whether Deepseek Changes Their Strategy with Nabeel Hyatt @ Spark Capital

Nabeel Hyatt · Apr 4, 2025

Second-time founders who say all they want is good money, good terms and a VC who gets out of the way are setting their bar too low

They are settling for mediocrity because they're afraid of risk

26:09 20VC: Why To Win in AI, Investors Need to Change Their Approach | Why VC is Run by Principals and Associates and is a Broken System | The Bull Case for Anthropic & Whether Deepseek Changes Their Strategy with Nabeel Hyatt @ Spark Capital

David Frankel · Oct 14, 2024 · hedged

A meaningful part of an investor's value is non-financial — standing by founders through crises unlocks chemistry and lifelong partnership even when returns aren't the point

When his only bankruptcy hit, Lou Rosenbloom took him under his wing and told him to return every cent of his secondary; the experience of being taken care of by an expert created a bond that means 'we'll do every company together after that'

Scope: acknowledges it sounds ridiculous to say it's not about financial returns

69:38 20VC: Investing Lessons from FC Seeding Uber, Airtable and Coupang | Why Pro Rata is the Original Sin in VC | Why Liquidity Has Died in 2024 | Why LPs are Pissed with VCs | The Hard Truth About Seed Fund Economics with David Frankel @ Founder Collective

Bucky Moore · May 5, 2025

The core of a great founder-investor relationship is that both genuinely love having each other in their lives; the derivatives are deep curiosity about the founder, unwavering conviction in their vision, and instincts for when and how to help — and most importantly when to get out of the way

60:16 20VC Exclusive: Why Mega Platforms Will Win in VC | Why You Cannot Do VC If You Do Not Do Pre-Seed | Why Market Sizing is BS | Where Will Foundation Models Build/Buy Apps vs Where Will They Not with Bucky Moore

Harry Stebbings · May 5, 2025

Mutual personal affection is a precondition for a working founder-investor relationship, and remarkably few people in venture will say so

The work is hard, and if the two parties don't enjoy hanging out it simply isn't fun

60:48 20VC Exclusive: Why Mega Platforms Will Win in VC | Why You Cannot Do VC If You Do Not Do Pre-Seed | Why Market Sizing is BS | Where Will Foundation Models Build/Buy Apps vs Where Will They Not with Bucky Moore

Ophelia Brown · Mar 17, 2023

After investing, the core work is building enough trust that founders share bad news quickly, because that's the only way an investor can actually help

Not everything goes up and to the right; problems are inevitable, and you worked hard to win the partnership so you should work equally hard to solve them — which requires knowing early

24:15 20VC: Why Growth Investors Ruined the Venture Market, Why Marketing in Venture Has No Substance, Why Follow-On Investing Can Damage Returns and The Mistakes VCs Made in the Last 18 Months with Ophelia Brown, Founder @ Blossom Capital

Miles Grimshaw · Sep 18, 2023

Trust is the prerequisite for a VC adding value; without it, context and communication are useless because founders won't listen

You can share whatever you like but without trust they'll always doubt it; trust plus high context and high-bandwidth communication is what tilts decisions

21:41 20VC: Benchmark General Partner, Miles Grimshaw on The Five Pillars of Venture Capital, Why Data Can Be a Trap When Early-Stage Investing, Investing Lessons from Missing Figma and Plaid & The New Business Model for AI & Why Co-Pilot is an Incumbent Strate

Gili Raanan · Mar 18, 2024

What makes Doug Leone an exceptional investor is the combination of knowing the business extremely well and genuinely caring about the founders he partners with.

Many founders find Doug intimidating or are scared of him, but the underlying motivation is care for the founders and the investment.

53:30 Deep business knowledge combined with genuine founder care defines elite investors

Alex Bouaziz · Feb 1, 2023

The most valuable investors are the picky ones who deeply commit to few companies, because they become the person you can actually admit failure to

Most investors are great but busy; Anthony Schiller invests rarely and commits deeply, and has become a friend Alex can commiserate with

37:40 Picky investors who commit deeply to few companies become the confidant you can admit failure to

Mike Lazerow · Aug 2, 2021

Founders do not remember the specific things their investors did for them; they remember how those investors showed up, listened, made them feel in good times and bad, and took their asks seriously

As a founder he cannot recall the specific actions of his own investors, but recalls vividly how each of them interacted with him

10:03 Founders remember how investors made them feel not their specific actions

Jude Gomila · Feb 11, 2020

Founders and investors need common ground on exactly three things: a shared grasp of reality, a shared ethical framework, and aligned incentives.

Reality is objective and you cannot succeed working against it; ethics determine how an investor behaves in an exit or a bad situation; incentives determine whether you are both building the future or one party is only there for returns.

10:04 Shared reality ethics and incentives are the essential common ground

Vince Hankes · May 3, 2023

Building trust with founders is fundamentally about being predictable — telegraphing how you think and how you will decide so they are never surprised

People don't want to feel surprised; when they understand how you think it breaks down boundaries and creates mutual empathy, and they don't feel decisions are being imposed top-down

8:32 Predictable telegraphed decision making builds founder trust

Eléonore Crespo · May 9, 2025

Founders should bring new investors who offer fresh ideas rather than friends who were already helping and whose thinking they already know; separately, in VC it is critical to find people who can challenge you every day.

Friends were already helping and she already knew how they thought; she wanted fresh ideas and people who would be truly candid with her.

5:59 Fresh perspective new investors beat already trusted friends who already help

Harry Stebbings · May 13, 2024

Unlocking investor enthusiasm is what makes a founder willing to open up

52:35 Investor enthusiasm unlocks founder openness

Cliff Obrecht · Jan 27, 2023

Trust is the most important quality to look for in an investor, because knowledge and skills can be acquired commercially but trust cannot

Domain expertise can be bought or borrowed by reaching out to smart people and paying advisers in equity, so what an investor uniquely brings is trustworthiness over a long relationship

21:46 Trust cannot be bought unlike knowledge and skills so it is the key investor quality

Mark Goldberg · Oct 25, 2024

What founders really want is a direct relationship with an experienced investor

8:17 Founders want a direct relationship with an experienced investor not platform services

Tom Hulme · May 8, 2024

Being openly honest with founders about the risks and the balance of reward makes for better investor-founder relationships than performing conviction

The best relationships are more honest; telling founders what you'd watch out for and how you see the risk/reward balance works better

36:38 Honest risk reward communication beats performed conviction

Sarah Tavel · May 6, 2024

Trust is the foundation of the board-member-to-founder relationship, and a founder without an investor they can be vulnerable with is in an extremely lonely and difficult position

Founders need a trusted investor to help them navigate hard moments; without one, they have nowhere to bring the real story

51:36 Trust enabling vulnerability is the foundation without it founders are isolated

Adam Fisher · Jan 22, 2024

The old paternal, adversarial VC-entrepreneur relationship was harmful and should be replaced by a genuine partnership approach

VCs acted as if they knew the right way; what founders actually need is not someone telling them how to do it but a partner they can confide in and tell the good and bad of the day without hesitating

5:58 Partnership not paternal know it all vc model is what founders need

Adam Fisher · Jan 22, 2024

A VC's job is to be counter-cyclical to the founder's mood — lifting them up after disappointments and pulling them back down when they get giddy about a valuation or acquirer interest

Reacting to both good and bad news with composure makes founders more transparent and forthcoming, and that flow of good and bad information is the secret of a partnership that lasts

38:10 Vc should be counter cyclical to founders mood tempering highs and lows