How to spot a VC who will absolutely ruin your life
Some investors help you scale; others demand KPIs before your MVP is live. Get funded without getting f**ed — here’s how to spot the red flags before they wreck your cap table.
Hey friends 👋
You did it.
The pitch landed. The partner smiled. The follow-up came fast.
You got the term sheet. It’s real. You’re gonna get funded.
You’re also gonna get fked.
Because not all capital is created equal. Some comes with helpful intros, sage advice, and a quarterly advisory meeting that ends early.
The rest comes with 3x liquidation preferences, weekly “strategy syncs,” and a partner who thinks your startup is their second job.
This week, we’re decoding VC red flags — both the obvious and the insidiously subtle — that signal an investor might be less “partner in your success” and more “part of your villain origin story.”
Ready? Let’s dive deep 👇
As always, I’ll be live tomorrow at noon PT right here on Substack:
Let’s start with what to look out for — the big-ass red flags 🚩
Introducing the parade of horribles
I’ve talked a ton in this newsletter (not to mention on the podcast) about the importance of being able to show investors the receipts.
You have to pitch with evidence, demonstrate traction, and embody patience.
It’s what separates trustworthy founders from not, and investors are no different.
The bad investors just show up with vibes, a recycled pitch deck, and a Google Doc full of ‘feedback’ they definitely didn’t read twice.
Here are a few of the worst offenders to look out for:
1. The Control Freak
Wants a board seat, veto rights, observer rights, and input on the color of the CTA button on your landing page like it’s a high-stakes design sprint.
They’ll say they’re just “hands-on,” but what they mean is they want to play founder without doing any actual work.
Founder warning label: May attempt a hostile takeover via calendar invites.
2. The Clout Chaser
Loves tweeting about “backing bold founders” but ghosts you when you need actual help.
Shows up in photos, not in strategy.
They want to ride in your rocket — but only if the rocket comes with TechCrunch coverage and a ring light.
Founder warning label: More interested in building their personal brand than your company.
3. The Ghoster
Super engaged during the raise. Big promises, quick replies, all-in.
Then the wire hits — and they vanish into the mist.
No check-ins. No support. No answers. Just vibes.
Founder warning label: You’re on your own now, sweetheart.
4. The Fake VC
Not a fund. Not even a real angel. Just a person with an LLC, a LinkedIn premium account, and a dream.
They’ll string you along, take up space in your round, and quietly disappear when it’s time to wire.
Honestly, half of AngelList is just those guys in puffer vests with Medium blogs and no record of writing checks.
Founder warning label: If their “firm” doesn’t have a website and they won’t introduce you to their GP… run.
5. The Deal Creep
Says all the right things — then “just needs a few small changes” to the term sheet. And then a few more. Those changes include liquidation preferences, pro-rata rights, and your dignity.
Mostly your dignity.
They negotiate like it’s a sport… but only after you’ve told everyone they’re in.
Founder warning label: Will 100% gaslight you into thinking the original terms were “just a placeholder.”
6. The Metrics Masochist
Doesn’t understand your product. Doesn’t care about your customer. But boy do they have thoughts about your CAC:LTV ratio — on Day 3 of your MVP.
Wants hyper-growth with zero burn and weekly cohort analysis — on a product that barely exists. Probably a former management consultant, and you know how they love to hear themselves talk.
Founder warning label: Still thinks monthly active users are a leading indicator of success. In 2025.
So, how do you make sure you’re not onboarding your future nemesis?
And, ideally, how do you do it before they wreck your cap table and your life?
Bad VCs aren’t that different from controlling lovers. The first date is all compliments and shared dreams. But give it a few weeks and suddenly they’re questioning your priorities, asking to meet your friends, and rewriting your roadmap in a Google Sheet.
Fortunately, you don’t have to wait until a board meeting from hell to find out who you’re dealing with. Here’s how to run your own little reverse due diligence process before letting someone buy a piece of your company:
1. Backchannel like a founder with trust issues
You already know to talk to portfolio founders. But don’t just call the poster child success stories they put on their website.
Call the quiet ones.
The ones who didn’t raise a Series A. The ones who pivoted. The ones who failed. That’s where the truth lives.
What to ask:
How do they behave when things go sideways?
Were the investors helpful, annoying, or just gone?
2. Ask about post-investment involvement (and watch their face)
“What kind of support do you typically provide post-investment?”
If they say “we’re here when you need us,” that usually means they’re not. If they say “we’re very hands-on,” that might mean they’re too available.
Read between the lines — and trust your gut on tone.
Red flag answers:
“We like to get deeply involved in product.”
“Our team has strong opinions on growth strategy.”
“We set KPIs with all our portfolio companies.” (Cool, thanks for the chore chart, Dad.)
3. Push on their value-add (and look for the panic)
If their answer to “what’s your value add?” includes the word “network,” ask for intros they’ve actually made for companies like yours.
If they say “pattern recognition,” run.
It’s just VC-speak for “I invest based on vibes and survivor bias.”
Test this: Ask them to tell you about a founder they backed before the market understood the idea. If they can’t name one, they’re probably just following the hype train.
4. Clarify governance before the term sheet
Before you even get to documents, ask what they expect in terms of governance: board seats, voting rights, decision-making involvement.
This shouldn’t be a weird question.
If it is, here’s your flag 🚩
5. Watch for weird energy during negotiation
Shifting terms? Passive-aggressive wordsmithing? Delays without explanation?
All signs you’re about to spend the next 18 months decoding cryptic emails from someone who treats your startup like the ex they’re still low-key obsessed with.
You know… the one they stalk on Instagram but claim they’re “totally over.”
VCs reveal their true nature during negotiations: if you see power plays early, they only get worse with time — and traction.
6. Check their portfolio size and fund stage
Are they spread too thin? Are they deploying from a zombie fund? Are they out of dry powder and trying to look busy?
You’re not just choosing money — you’re choosing who gets to ride shotgun for the next three years.
Make sure they don’t come with a blindfold and a panic attack.
You’re not just raising capital — you’re choosing a co-conspirator
When you take money, you’re not just swapping equity for runway.
You’re inviting someone into the inner circle — strategy meetings, board votes, crisis calls at 11pm.
You’re choosing a co-conspirator in your little crime drama.
They’re who will help you break rules, make bets, and occasionally bail you out of your own brilliant mess.
So ask yourself:
Would you trust this person with your biggest decision?
Would you want them in the room when everything’s on fire?
Good investors amplify your momentum. Bad ones add friction, drama, and three extra slides to every board deck.
Because the wrong money isn’t just expensive — it’s radioactive.
Traction is earned, but trust is negotiated.
So choose your co-conspirator carefully. You’re building the next act of your story — and they’re either helping you win… or writing your own villain origin story.
Until next week,
—jdm
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