Why Do VCs Keep Giving "failed" Founders Money?

Why Do VCs Keep Giving "failed" Founders Money?

Author: Startups.com February 26, 2024 Duration: 33:42

In today's Startup Therapy Podcast, Wil and Ryan talks about why investors choose to invest on “failed” founders. They debunk the myth that failure marks the end of a founder's journey and shows why giving people a second chance is the best investment. Tune in as they explore the investor mindset, focusing on why they prefer to invest in founders who have shown they can bounce back and learn from failure, ultimately changing how we think about startup success.


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Resources:


What to Listen For

  • 00:00 Intro
  • 01:03 Why giving people a second chance is the best investment
  • 02:29 Redefining failure
  • 04:59 “One failure doesn’t make the person a failure…”
  • 09:30 If you’re making mistakes, you’re also learning
  • 10:05 Spotlight on failure
  • 13:59 The value of experience
  • 16:49 Before the failure, there was a success
  • 20:33 Trust and familiarity in investor-founder relationships
  • 23:21 Challenge of investor decision-making
  • 27:14 Focusing on building relationships
  • 30:42 Investing in the founder’s mindset rather than ideas

Building a company is far more chaotic and personal than any business school case study lets on. Startup Therapy from Startups.com digs into that reality, moving past polished success stories to focus on the raw, unvarnished journey. Hosts Wil Schroter and Ryan Rutan, who have each navigated these trenches themselves, lead conversations that feel more like essential conversations between founders than a standard interview show. They tackle the specific pressures that come with trying to transform an idea into something meaningful-the financial strain, the team dynamics, the personal sacrifices, and the frequent moments of doubt that rarely make the keynote speech. This podcast operates on a simple premise: the best guidance comes from those who have been there, not from abstract theory. Each episode is a candid session, dissecting the professional hurdles and the intense emotional toll that founders manage daily. You’ll hear direct talk about fundraising fails, partnership conflicts, burnout, and the small victories that keep everything moving forward. It’s a resource for anyone in the thick of building something, offering practical perspectives and a sense of shared experience when the path gets especially tough. The dialogue is straightforward and focused on actionable insight, providing a genuine look at the resilience required to change the world, one startup at a time.
Author: Language: English Episodes: 100

Startup Therapy
Podcast Episodes
The Most Expensive Equity Doesn't go to Investors [not-audio_url] [/not-audio_url]

Duration: 46:21
Why do founders fight over giving an investor 15% but hand out huge chunks to co-founders, employees, and advisors with far less certainty of return? The episode argues that investor dilution is often the cleanest trade…
How to be Great at Worrying [not-audio_url] [/not-audio_url]

Duration: 35:55
Ever wake up at 3:00 AM convinced your startup is about to break? The conversation unpacks how founders can’t really “leave work,” and how constant vigilance can turn into fear dressed up as responsibility—endless rumina…
Can Startups Be a Team of One? [not-audio_url] [/not-audio_url]

Duration: 43:05
What happens if building a startup no longer requires a team? The conversation explores how AI is rapidly turning the classic “product + developer + marketer” founding trio into an optional choice, making one-person comp…
Why are we Really Building a Startup [not-audio_url] [/not-audio_url]

Duration: 33:43
What are you really trying to fix by building this company—and what happens when you finally admit it? The conversation unpacks how founders often default to a public “change the world” story while their private motive i…
We Rarely "Control" Our Startups [not-audio_url] [/not-audio_url]

Duration: 46:35
Worried about “losing control” because of dilution? This episode breaks down why equity is a poor proxy for control in startups: the cap table splits money, while control is defined by decision rights in the operating ag…
Founders Need Finish Lines [not-audio_url] [/not-audio_url]

Duration: 38:33
Ever feel like you hit a milestone in your startup and immediately get handed the next problem? The episode explores why startup work rarely delivers a true sense of “done,” how founders get trapped by the arrival fallac…
What Should My Expectations Be? [not-audio_url] [/not-audio_url]

Duration: 47:47
Ever feel like you’re working nonstop and still falling behind? The discussion argues founder happiness and decision-making improve fastest by recalibrating expectations, because “happiness = reality ÷ expectations.” Usi…
What Actually Happens When A Founder Runs Out of Gas? [not-audio_url] [/not-audio_url]

Duration: 34:11
What do you think really happens if you burn out and step away for a minute? The conversation breaks down how founders often imagine an apocalyptic chain reaction—customers leaving, the team collapsing, investors panicki…
The Value of Distraction [not-audio_url] [/not-audio_url]

Duration: 35:04
What if the thing that looks like a distraction is actually the move that saves your startup? This episode breaks down why the “stay focused at all costs” advice can be risky when you’re still figuring out what actually…
Master Failure [not-audio_url] [/not-audio_url]

Duration: 36:07
What if failure isn’t something to avoid, but a skill to master? This episode breaks down why startups can’t be built on certainty—new markets, new products, and new teams mean you’re guaranteed to be wrong a lot. The go…