Listen to VCs

Some of my newsletters might come across as “VC hate” (as one VC friend put it). That’s not my intention. I don’t hate VCs—far from it. Many of my closest friends are VCs, and without them, not only would I not have had much of a career, but also building fast-growth technology companies would be exponentially harder. Venture capitalists are an incredible resource for founders. They see patterns, markets, and deals that individual founders simply can’t.

VCs as the finance department

In a large company, the CFO controls funding. If your idea doesn’t meet their financial targets or make sense strategically, they’ll shut it down. VCs play a similar role for startups—but in a distributed fashion. If one VC doesn’t believe in your idea, another might. Unlike a corporate CFO, the venture ecosystem allows for a diversity of perspectives, which can be a huge advantage for founders. You might also just have an off day pitching one VC, and be in a flow state for another.

Great VCs, whether generalists or specialists, see an enormous number of deals. They have context across industries, geographies, and business models that founders rarely do. They also see companies evolve over time—some have watched 50+ startups rise and fall over full lifecycles. VCs that are active board members are usually in the room where it happens. That kind of exposure breeds insights that can be invaluable.

Knowledge as Leverage

Founders often assume they know more about their business than a VC. Sometimes they do—especially when it comes to customers and product. But VCs often have a broader view of the market. They see where companies stumble, what strategies scale, and how competitors operate. This can be a major advantage for founders—or a challenge.

The best VCs will benchmark your progress, surface best practices, and offer strategic insights. Some will even solicit pitches from your competitors to gather intel. Ethical or not, it happens all the time. I’ve personally benefited from it, and while I had misgivings at the time I clearly had a duty to read my competitors deck and learn what I could. This obviously goes both ways. Be wary of unsolicited VC inbound, and always ask if a VC is looking at a competitor or has invested in one but not announced it yet.

If a VC loves your market but you don’t let them in, they might fund a competitor instead. Strava learned this the hard way. When one firm was shut out of their Series A, they went and funded a direct competitor. Sequoia consistently leading WhatsApp’s rounds without running a process avoided this and kept WhatsApp’s success a secret.

Rejection as a Data Point

VC rejection is inevitable. The best founders treat it as feedback. If every VC raises the same concern, maybe there’s something worth addressing—churn, market size, unit economics. If opinions are split, you might be talking to the wrong investors. But if nobody is biting, it might be time to reassess the business itself.

It’s also important to recognize that anything short of a term sheet is a no. VCs rarely slam the door completely—they always want to keep optionality open. This is especially true for larger funds, where the math makes them less price-sensitive at later stages. They might pass on your Series A, but want to fund your Series B or C. A friend really wanted Emergence as an investor; they brought a lot of SaaS knowledge. They passed on his A, but led his Series B. Same happened with another company and Andreessen.

The Network Effect

Beyond capital, top VCs bring networks that can materially impact a startup’s success. They introduce real, vetted service providers—recruiters, accountants, GTM advisors—who actually deliver. Their backing makes hiring easier, as many top operators filter for companies with strong VC support. They can unlock better debt financing, influence M&A outcomes, and even offer founders an implicit safety net against bad actors in the ecosystem.

Not every VC has a great network or profound impact on hiring, but most of them will tell you that they do. It’s worth talking to portfolio company CEOs to find out how much of the promised help they actually delivered. But this help is real and it is very, very valuable.

The Takeaway

Listening is key. VCs don’t know everything, but they do know a lot—often more than founders realize. Their feedback, whether through direct investment or rejection, is valuable data. Some of the best lessons I’ve learned came from VCs who passed. And in hindsight, I’m more grateful for the hard nos than for the ones who kept a struggling business alive longer than it should have been.