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Am I a Bad VC for Wanting Our Portfolio Companies To Make More Money for Public Investors Than They Did For Us?
Hoping for a Legacy of Enduring Corporations, Not Penny Stocks or Goodwill Write-Downs
Get me a cremation urn decked out in company logos like a NASCAR driver (notice to the executor of my will, there’s gonna be a lot of weird requests). While my life is greater than just my career, I do believe in working on projects that you’d put on your tombstone. And since the Homebrew logo is already tattooed on my shoulder, extending the portfolio to my posthumous memorials isn’t that far of stretch. But the motivation here isn’t an IRR victory lap, more a goal that the companies we were associated with were enduring, even beyond my own life.
As venture capitalists, we toggle too often between claiming credit or distancing ourselves from a startup based on the circumstances. Winning companies produce stories of key introductions, strategy discussions and other ‘value add.’ Failures yield ‘I’m just a small investor’ or ‘you know there’s only so much you can do in that situation’ even when our tenure involved Board service or systemic ethical lapses. I’m throwing stones from inside, not outside, the glass house as I’m surely guilty of this as well (although we try to own our decisions through the lifecycle).
This confusion traditionally doesn’t extend to post-exit company trajectories. Off the cap table, no longer a shareholder (or at least a declining one as you sell off/distribute), at some point stepping down from the Board. It’s a break point where you can root for the team, or scrub it from your mind, but you have set the company free and it’s back to work on the portfolio.
And yet I still wonder, as I look at the downward trajectory of most SPACs and other tarnished IPOs from the last few years, how I’d feel if those were my legacy. Did I do my job? Yes. Investing in a company when it was just starting out — odds are stacked against any startup surviving, let alone thriving — and guiding it to an outcome that at the very least gave it a chance to find sunlight. The SPAC sponsors, the institutional buyers, the retail investors. They all have a right to transact freely in an open market. If they took on risk and…
