Startup founders deserve to know their investors
With abundant capital For startups over the past few years, the balance of power between investors and founders has been tilting toward the latter. This manifests itself in many ways along the startup lifecycle, from more favorable early-stage term sheets to more general listing terms more favorable for a founder.
There is one area that has yet to be touched: the anonymity of the Fund’s Limited Partners (LPs). Venture capitalists rarely, if not, fully disclose their liquidity providers, even to the founders they have invested in.
Both LPs and VCs have reasons for wanting to keep their participation confidential. But when these reasons are not strong enough, my expectation is that this will change.
The main driver, in my opinion, will be the pressure of the founder.
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With the competition growing for the hottest deals, investment investors are increasingly having to sell themselves to founders they hope to support. In this context, the old model in which founders have to undergo extensive due diligence while not being allowed to ask a single question seems outdated. Now, when entrepreneurs get a chance to start induction, they are more likely to ask about limited entrepreneurs.