Asking venture capitalists to invest is a past practice for tech founders. This led to another experience around the world: the VC horror story. A great discussion sharing such stories took place all week on X, with funny and offensive comments. We read them all to find the most interesting ones so you don’t have to.
Greg Isenberg, a startup podcaster, columnist, and founder of Late Checkout Studio — the company that runs his previous venture that included the company acquired by WeWork — started the conversation with a story about a VC falling asleep during a meeting. Isenberg has a lot of followers on X, and his posts are clearly shocking.
“I once walked into the boardroom of a top 3 VC firm for a $15M Series A. 12 people in the meeting. One of the doctors fell completely asleep. It was cold for 30+ minutes. No one acknowledged it. Everyone just moved on,” he shared on X.
VCs sleeping through pitch meetings was far and away the most common horror story shared. Not just sleepy, but full of them.
Zynga founder Mark Pincus told his VC-elele story. “I looked at my friend who founded the meeting and asked if I should continue presenting and he said yes. It was a weekend at bernies meeting Silicon Valley,” he wrote.
Interestingly, sleeping did not mean that the VC would not invest. Many founders have reported receiving term sheets from colleagues who fell asleep during the game.
“I did a partnership in 2015 in our Series A where one (famous Midas) partner fell asleep and the other couldn’t stop swearing. Got a call hours later from ICs saying they were sending out a term sheet,” Liz Wessel wrote. Wessel, who founded and sold HR startup WayUp and is now a partner at First Round Capital, said his team didn’t take the money — and the VC was shocked.
There has been so much talk about sleeping VCs that former a16z partner Arianna Simpson wrote, “Are VCs okay?? Narcolepsy seems to be rampant.”
There have been, of course, more than a few stories about VCs signing term sheets and then pulling out at the last minute, or ghosting, never wiring the money. The even more painful part? Some of these VCs apparently continued to treat founders as portfolio companies anyway, asking for company reviews or acting as a reference. One founder said the VC even wanted a share of the proceeds after the buyout.
Travis Kalanick, the founder of Uber who is known for his determination, told a story about finding out that the VC was trying to fire the meeting and leave the building. Kalanick followed the VC in his car and jumped into the passenger seat.
Not everyone has a bad experience to report. Some founders say they’ve had nothing but positive experiences with VCs, a few even share love stories with some investors. Yes, most VCs work hard, genuinely try to be helpful, and don’t fall asleep during meetings. But bad experiences are so common that Pincus exclaimed, “I love this moment, when founders no longer need to be afraid to call out VCs for dumb behavior.”
The most amazing news
However, the really surprising news is the one posted by Cloudflare founder Matthew Prince. “A partner at Sequoia passed on Cloudflare because he didn’t think a woman could lead a security infrastructure company,” Prince wrote. The woman in question is Cloudflare founder and COO Michelle Zatlyn. Given that Cloudflare is now an $87 billion market cap company, and is expected to generate $2.8 billion in revenue by 2026, the judgment doesn’t age well.
Sequoia partner Shaun Maguire, no stranger to backlash, responded that he always loved Zatlyn, and asked Prince to discredit his partner. Prince replied, “Maybe you’re a day late. But I bet you already have a good guess.”
But wait, Prince ate more!
He told a story about well-known investor Vinod Khosla, who asked for an investment and then, according to Prince’s recollection, suggested that the founder “fire” his co-founders and take their stock. “I think the letter to help the needy was to check my character. But I got so angry that we never spoke again. He blocked his number.”
Prince was quick to add a comment about Khosla: “He’s extremely smart/very smart. He’s been an amazing investor – he can’t argue with his track record. Just not a personality I’d choose to work with.”
It is worth noting that memories of conversations often differ, and we do not know what Khosla said, what he meant, or what he actually remembers. But the eyes shine in such an open talk about one of the most successful, powerful VCs in the Valley. Many people cite Prince’s innocence as an example of having “FU” money. Prince is definitely a billionaire these days.
Not all Prince stories make VCs look bad. In particular, he thought he had a meet-and-greet on Monday with Marc Andreessen, founder of the venture capital firm a16z. Instead, Andreessen showed up with his entire investment team, ready to surprise. He did not impress the poorly prepared Prince. “I put in a draft of the rejection letter they sent,” he said of the result. Others told similar stories of meetings with Andreessen and his firm.
Perhaps the funniest story came from Julie Fredrickson, a founder-turned-investor, who received a call from a VC partner before arriving at the company’s office – warning him about a rock formation visible outside the window, which apparently, unknown to the investors inside, was shaped like male genitalia. “The company will forever be Dickrock Ventures,” he wrote.
While the local VCs were grilled a lot, the founders shared incidents involving international VCs, too. Some VCs also like to connect to limited partner investors.
The threads are worth reading not just for the laughs, but for what they reveal: The fundraising process is invisible, the dynamics are real, and the information founders whisper about in private is more common than the industry often admits publicly.
Perhaps Isenberg explained the moral behind all these stories better. “If you’re raising money right now, just know: every founder has a story like this. The process is crazy. The dynamics are crazy,” he wrote.
The second lesson would be: If Andreessen agrees to meet with you, he means business.
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