In the latest StrictlyVC Download podcast, Aileen Lee discusses the fallout of the recent funding boom and subsequent decline, highlighting the issue of orphaned startups. Many companies are caught in a tumultuous phase, lacking the guidance and support they once received from their venture backers. This situation is exacerbated by the departure of experienced leaders during the investment boom, and limited partners are often hesitant to critique top fund managers out of fear of losing future investment opportunities. Lee emphasizes the negative impact of insufficient training and mentorship for newer investors, leading to a significant number of poorly made investments.
Everybody wants to get into X brand name fund, and so they never will criticize them [for fear of repercussions] . . . But what they would say is [that] all the people who have [were] hired at these venture firms during the ZIRP era . . . they made a bunch of crappy investments" and now they are being elbowed out.
All [the LPs'] money basically just got thrown down the drain because the people in the venture jobs didn't stick around long enough to see if the companies were successful.
Just a ton of people didn't get trained and didn't get any mentorship or apprenticeship were given checkbooks, and a lot of investments were made, and . . . there are a lot of orphaned companies.
In many cases, companies have been orphaned by a more senior general partner who led the investment - who is still there [at the firm] but just stopped showing up to the board meetings.
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