The venture capitalist’s dilemma

A fantastic takedown of the venture capitalists behind the Silicon Valley Bank collapse, written by the fantastic Molly White (of Web3 is Going Just Great fame).

When it became apparent to this small group of very powerful, very wealthy individuals that Silicon Valley Bank — the bank used by much of the Silicon Valley startup ecosystem — was on shaky footing, they had a choice to make. They could remain calm, urge the founders of companies they’d invested in to do the same, and hope the bank could weather the storm. Or, they could all pull their money out, urge their founders to do so also, and hope that they or their companies were not the ones left standing in the teller line when the liquidity dried up.

Faced with the choice between the more communal, cooperative choice and the self-serving, every-man-for-himself choice destined to end in a bank run, it should be no surprise which option they picked. As the Titanic sank, they were the ones pushing people out of the lifeboats.

As someone heavily involved with startups of all shapes and sizes for the past decade, I’ve been exposed to all sorts of investors.

The ones who make me cringe and run the other direction as fast as possible are those who are in it for a 10x return and nothing more.

This relentless pursuit of profit is the epitome of everything I hate about the startup scene.

It makes people act in such a selfish manner, thinking only of themselves and their own pocketbooks rather than their fellow human being.

In all the ventures I am apart of, I insist that the following criteria are met:

1. The solution that is being worked on solves a problem that will materially and objectively leave the world in a better place.
2. There is a clear market of people willing to pay for this solution, and ideally the people who are paying for it are actually the end user of the product or service.
3. All shareholders are interested in more than just an ROI from the venture.
4. The end user is aware of what data they are giving up (or what data is being derived) from their use of the solution.

If the problem being solved by a team is simply “how can I turn my cash into 10x my cash”, then that team and their investors should feel ashamed.