Jason M. LemkinCEO, SaaStr · Co-Founder of SaaStr AI, SaaStr Fund, Adobe Sign

The Dark Side of VC Enabling Founders with Excessive Growth Incentives

9 Apr 2024 · 0 min

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0:21

A short transcript excerpt from a YouTube conversation (Jason M. Lemkin with another speaker) about how venture capital incentives push founders toward excessive growth and risky behavior. The speakers argue VCs enabled this by structuring funding and secondary deals that reward rapid scaling and large founder payouts (mentions of $50–$150M withdrawals), with Lemkin using a "drug dealer" metaphor to stress VC responsibility for these incentives.

But often at that.
Stage of, like, investment. I'm not necessarily talking about hopping, just generally at that stage of, like, company trajectory. 10 million isn't really what the investors are going for because they need to move more money. That's why they need to move 150 to get 3 or 4%.
I understand, I understand their goals. And they may be regretting some of those secondary deals because of the incentives they created. Incentives matter.
They do.
The VCs are now living with the fact that, yes, the founders push things too hard, but the VCs were the enablers. They were the drug dealers. This is my point. They gave out the heroin or the. Well, I don't know too much about drugs. I know people. Whatever drugs people use today, they gave it out. They give out these drugs. And I'm a founder and my growth is slowed. And I have a 1050, 100, $200 million in the bank. Okay, there's the founders that took out 50, 100, 150 million from companies that, that aren't already that the real issue is they didn't leave the planet, right?