of venture capital The (VC) world has long been characterized by its tight-knit and somewhat private community. Founders typically keep a low profile about what goes on behind closed doors, largely because of their significant financial backing in the investor community.

Understanding the dynamics within this community can be challenging without direct exposure or daily interactions with investors or founders. Over the past two years, my growing involvement in the VC community has brought to light both commendable individuals and troubling trends that have direct implications for founders.

In the field of venture capital, there are VCs who truly support founders, but there are also those who exhibit behaviors that can hinder entrepreneurial success. Despite a shared desire among all stakeholders for optimal business performance, founders and VCs occasionally face misaligned incentives. While investors may have the intellectual intention of supporting their founders, there is a challenge in fostering an environment where founders feel comfortable being open about what is or isn't working in founder-investor relations.

Drawing on my expertise as a business psychologist, I have observed the financial consequences of founders neglecting investor relations management at the expense of their businesses. My aim is to shed light on these observed issues and encourage VCs to reflect on their actions. Projecting emotional or mental health issues into invested founders not only jeopardizes financial returns, but also exacerbates challenges for entrepreneurs who already face significant obstacles.

Connected: 5 Tips for Navigating the Entrepreneur/Investor Relationship

Three prevalent dysfunctional VC archetypes emerge

1. The bully:

The Bully archetype within the VC landscape is often portrayed as an investor with an initially charismatic and supportive demeanor. However, this facade is quickly transformed once the paint has dried on the contract. These VCs may lack significant experience operating as CEOs, causing them to impose their subjective views on what it takes to be a CEO. Successful CEO. Criticism often targets the founder's decisions and sometimes questions their character, suggesting they are unfit for the role or negligent in their fiduciary duties.

The bully uses vague strategic advice on purpose, creating ambiguity to make failure more likely. This lack of clarity allows the Bully to take advantage of opportunities to point out the founder's supposed incompetence, negatively impacting the founder's ability. SELF-ASSESSMENT and decision making. The unpredictable nature of interactions with such VCs further contributes to an unhealthy founder-investor dynamic.

Picture of the bully archetype:

Qualities: Lack of operational experience; emotional instability; it creates “gotcha” scenarios.

Impact: Harmful to the founder's self-esteem; insecure connection; The relationship between the founder and the investor leads to a lack of trust

2. Dad:

The Daddy archetype is characterized by a protective attitude and a hero complex. These investors use their initial trust in the founder as a tool of manipulation, reminding the founder of their unwavering support. This dynamic can lead to violations of professional boundaries, with the investor overstepping by offering unsolicited advice. The fragile ego of the Daddy investor is highlighted, revealing a need for constant validation from founders to maintain their perceived relevance and importance. This emotional support distracts founders from their primary responsibilities, creating an unbalanced power dynamic detrimental to business success.

Picture of the father archetype:

qualities: uncertain; manipulative; violation of professional boundaries

Impact: unbalanced power, as the founder may find it difficult to assert independence or make decisions without the constant approval of the investor Daddy.

3. Neurotic:

The Neurotic archetype enters the VC community, often through family connections or friends, with a potential lack of resilience for the rollercoaster ride of startup life. While these VCs may have impressive intelligence and academic credentials, they struggle to endure the inevitable ups and downs of the startup ecosystem. Their inability to weather challenges drives excessive involvement in their portfolio companies, requiring regular updates on performance. This behavior is driven by a lack of thick skin for the job, making them emotionally dependent on the founders during difficult times.

While their intentions may be well-founded, the Neurotic archetype must be cultivated greater durability. Rather than emotionally dismissing their founders, seeking outside support for managing their portfolio performance anxiety is essential to maintaining a healthy investor-founder relationship.

Picture of the neurotic archetype:

Qualities: excessive involvement; the need for ongoing security; lacks consistency

Impact: poor emotional boundaries; looking for the founder to ease their anxiety, which leads to the founders being distracted from the main business problems

Connected: The relationship between founders and investors goes beyond capital

Charting a course ahead

The venture capital industry operates under tremendous pressure, leading to stress, anxiety and a Fear of failure. However, founders can't handle VC stress, and if you identify with one of these archetypes, it's essential to address the core issues.

If you find yourself exhibiting bullying or bossy behavior and feeling the need to assert power over others, it is likely that someone has had power over you in your past. This is a wound that has remained untreated and unhealed. Without judgment, find a way to explore that core wound with a trusted therapist to reduce emotional projections.

If you are exhibiting behaviors from the neurotic archetype, you should be aware of your challenges, surround yourself with supportive individuals who can model emotional regulation, and use anxiety management tools such as OUTREACHtherapy and regulation of the nervous system.

If you're a founder facing a contentious relationship with investors, especially if it turns into an abusive situation, my advice to you is to stop blaming yourself for not “getting it” sooner. In my experience, founders blame themselves first and then internalize the stress and shame. Also, look to set boundaries, keep business discussions within scheduled meetings, and consider the behavior of others in meetings for support. People can appear better when there are more people in the room.

Investors and founders should schedule periodic meetings to openly discuss the dynamics of their relationship. As with any interpersonal relationship, it is essential to approach these conversations carefully, making sure they are structured to focus on the health and effectiveness of the overall partnership.

Navigating the founder-investor relationship is difficult, but it is essential to remember the common interests. Choose otherwise to avoid creating initial trip harder than it needs to be. In the startup world, where the odds are always stacked against you, how you choose to turn those odds around matters.

Connected: Investors are your war partners, not your beer buddies