Founders vs. VCs

If you’re really ambitious in startups, there’s only ever been two paths: founder vs. VC.

  • Founders go deep on one company.
  • VCs get to build a broad portfolio.
Why Not Both Meme - Porque No Los Dos
It’s possible to do both, and I don’t mean being a founder with a seed fund on the side.

VCs bet on startups, not founders.

  • So they’re incentivized to keep founders locked up in their original startups.
    • They don’t want founders to diversify.
  • VCs want a portfolio for themselves but not for founders.

“The power dynamic between venture capitalists and founders massively favors venture capitalists; after all, founders only have their one company, the survival of which depends on gaining funding, while venture capitalists see hundreds if not thousands of companies, and the default answer is “no.””

Ben Thompson

How can we fund founders’ whole portfolios, not individual startups?

This solves the fundamental misalignment between founders and investors:

  • Founders shouldn’t have to go all-in on each idea.
  • Investors should back founders long-term, not just for one startup.

Startup studios are the best of both sides of the table:

  • Founders should build their own portfolios of companies.

Studios encourage founders to build more long-term focused startups:

  • VCs love startups who can go public or get acquired within their 10-year fund cycles.
  • Studios can use PE-style 30+ year funds or permanent capital structures.
    • This avoids the rush to scale and exit startups prematurely.

I’m now building Utopic, the Dreamville (or Roc-A-Fella) for startups.

This idea is a work-in-progress. If you’d like to riff on it, hit me up @neilthanedar on Twitter.

Published by Neil Thanedar

Neil Thanedar is an entrepreneur, investor, scientist, altruist, and author. He is the founder & GP of Utopic, a pre-seed biotech VC fund investing in the future of science. He is also the founder & chairman of Air to All, a 501(c)3 nonprofit medical device startup, and Labdoor, a consumer watchdog with $7M+ in funding and 20M+ users. He previously co-founded Avomeen Analytical Services, a product development and testing lab acquired for $30M+ in 2016. He has also served as Executive Director of The Detroit Partnership and Senior Advisor to his father Shri Thanedar in his campaigns for Governor, State Representative, and US Congress in Michigan.