Startup Life/Opinion/

VC’s unwritten rules are keeping founders in the dark. It’s time to call them out

Unwritten rules in venture capital are used to exclude founders who aren't in the know. This has to stop.

Anyone
Alfred Malmros

By Alfred Malmros

A few weeks ago, I saw a VC on LinkedIn saying that a pitch sent from a Gmail account and not a bespoke company domain was a clear red flag — in other words, a reason not to invest. 

At first, I thought that this VC must lose out on a lot of good deals. There are tonnes of founders who are building great businesses, but buying a domain name isn’t their priority in the early days. Then I thought about how those founders must miss out on a lot of good opportunities, never having understood truly why a VC’s answer was no. 

This is just another example of how arbitrary codes have been used throughout history to exclude people. To create rules for membership in groups that make the insiders’ positions stronger. In tech especially, we’re guilty of prioritising talent that knows these unspoken rules, all while worshipping rule-breakers. 

Founders like myself, who have experienced these unspoken rules, have two choices when trying to pay it forward. Either we educate first-time founders about the rules, codes and language, or we give some honest feedback to VCs and risk losing out on potential opportunities ourselves. Today, I’m choosing the latter. 

The daily VC Twitter threads on “10 pointers for the perfect deck” or “Cold Outreach Masterclass” […] signal that you’re only welcome to this world on the VC’s terms 

As the industry makes more and more commitments to invest in diverse founding teams, a simple place to start is examining VC’s red flags, biases and filters. Does a Gmail address really indicate that a founder doesn’t have what it takes? Or could it signal that they’re bootstrapping and a Google Workspace account isn’t a priority pre-seed? 

The daily VC Twitter threads on “10 pointers for the perfect deck”, “Cold Outreach Masterclass” or “I’ve gotten a thousand pitches, here’s what I learnt” do contribute to transparency about the industry and what it’s like to raise. But they might be doing more harm than good, as they signal that you’re only welcome to this world on the VC’s terms. 

There’s always been a complex power dynamic at work between founders and VCs, and while there’s far more capital chasing great startup teams than the other way around, it’s still difficult for many founders to challenge norms and behaviours that reinforce existing inequalities in the European tech ecosystem. 

As a result, founders are increasingly turning to each other for advice, support and even early-stage investment. We’re already starting to see extraordinary talent make it without traditional VC investment altogether. And soon, if VCs don’t pull up their red flags and check their rules, the best pitches might stop coming — regardless of email domain. 

Alfred Malmros is the co-founder of Anyone.

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David Hold
David Hold

I was reading your article with great interest as it is the first time I hear somebody from the industry state the fact as they are. But there is much more to it that the industry is going the have to learn as it will start backfiring on them sooner or later. I was a banker but specialized in workouts and turnarounds and as such my focus was always bottom-line oriented At the start I tried to raise some equity from investment bankers and the one question that has amazed me was. Do you have traction? Even though our solution… Read more »

Quentin Martin
Quentin Martin

Where is the article? This is an intro…