Your Investors are Not Your Friends!

A typical startup investor

I don’t mean to say that investors are bad people; some of my best friends are venture capitalists. It’s just that most founders don’t realize that a good VC always has his investors best interests at heart, and those interests do not always line up with the interests of venture and certainly not with those of the founders.

Unfortunately, these conflicts usually only come to light when additional funding is to be raised and/or the start-up is not living up to expectations. New investment terms might strongly favor the VC over the founders, and more often than not, the investor’s guarantees of follow-on investment evaporate if the venture does not garner the interest of other investors.

At that point, founders are often blindsided by what they see as a betrayal of trust, but it’s usually just a misunderstanding of allegiances. You investors will always be on your side provided that it is always in their best interests be be so.

Your investors can provide a great deal of useful advice. But always remember, as a founder your obligation is to all the stakeholders and not a particular investor. No one cares more about your company than you, and it is your job — not your investor’s — to look after the interests of all your stakeholders.

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