We can generalize and split the VCs’ investment philosophy in two.
Founders Fund is the archetypal of one side.
Its own name signals its ethos: coaching founders is not imperative, since Founders Fund believes that the founders of outstanding startups are so gifted that some VC coaching would barely change their performance. “When we look at the strongest performers in our portfolio, they are the companies we have the least amount of engagement with. The art of VC is to find rough diamonds, not to spend time polishing them” – Founders Fund partner.
While Andreessen Horowitz being the archetypal of the other side.
Andreessen Horowitz popularized the concept of offering hands-on support. It modeled itself after a Hollywood talent agency and believes that offering help beyond equity capital represents lots of value added.
Since both VCs are highly successful there is no way to point out which investment philosophy is preferable.
Anyhow, most VCs ended up emulating Andreessen Horowitz’s approach, after all it is easier to convince investors when you show big teams (plus a super-turbo AI-powered screening process). Consequently, the number of noninvestment professionals on staff (Talent, Marketing, ESG, Business Development, Community, Investment Operations, etc.) reached 37% of the VC headcount.
But now the pendulum is moving back in favor of Founders Fund arm’s length approach – Sequoia Capital for instance, just announced a big shake-up.
First, a new bar was established after the recent tech layoffs wave – if the VCs are pitching efficiency to their portfolio startups, they should also give an example. Second, the Voice of the Customer: surveys show that most of the founders do not find these support resources particularly impressive and hardly take advantage of their work. Third, the current darlings of the industry, Benchmark and Thrive Capital, essentially count on a handful of partners.
We, at Fabrica Ventures, share Founders Fund’s investment philosophy.
We always believed that what makes the difference are experienced partners with the support of an active and skin-in-the-game Investment Committee.