Founder-VC relationship: This isn’t tango but a high-octane salsa

Is it like James Bond & Q, Batman & Robin, Sherlock Holmes & John Watson and Tom & Jerry?

Have you ever wondered about the relationship between a startup founder and a VC? I am sure it is all fun and friendly if the startup is doing well, but does it get contentious, or is boardroom drama a common occurrence? In reality, it is a ride filled with several ups and downs, where VCs go from helping with fundraising to being the sounding board to solving a critical problem.

To find out how this relationship works, we spoke with Theodore Rozencwajg, Co-founder and CCO of D2X, the EU-regulated B2B crypto derivative trading platform; Matthijs Huiskamp, Founder and CEO of Altura, an AI-based workflow solution for teams working on RFPs; and Mitch Voskuilen, Founder and CEO of Billy Grace, an operating system for marketers.

All three say their VC has been a true partner in their journey. However, that partnership isn’t without its fair share of challenges and friction, but they both argue that finding the right balance between support and success is key to overcoming any friction.

Fundraise motivation and VC selection

Huiskamp says their motivation to raise funding from a VC was primarily to accelerate growth. With the demand for intelligent bid management growing, the Amsterdam-based startup needed the right partners.

Huiskamp tells me an early-stage startup is not looking for money alone but for partners “who understand your vision, can add real strategic value, and are ready to support you during both the highs and the inevitable challenges.” He adds that they were also looking for deep SaaS experience and a strong network in their industry.

D2X decided to fundraise because it needed capital to further develop its tech platform, obtain its licence and implement its go-to-market strategy.

Rozencwajg argues that one of their key selection criteria was the ability to support D2X with recruitment. Moreover, VCs that can help with sales and marketing have an advantage. For founders, it is also important to choose VCs who can participate beyond the initial funding round.

Voskuilen argues that the main reason for them to raise capital from VCs was to capitalise on the first mover advantage they have with their differentiating product proposition. “We are the only European platform that provides a holistic operating system for marketers. Hence, we want to win as much of the market before competitors appear and catch up.”

When it came time to select their VC partner, Huiskamp says they met over a dozen VCs, while Rozencwajg says they must have spoken to around 50 funds to form the syndicate for their Seed round. While 50 may seem a lot, Rozencwajg adds that it was only 1/3rd of the number of investors they met for their Series A. Huiskamp says every conversation with a VC gave them more insight into the type of partner they were looking for.

He further explains that they chose Fortino because of the personal connection they built with the people at the investment firm. “In our case, working with Investment Director Wouter Goossens was crucial in this final decision. His grit, sharpness, and overall personality made us want to work with Fortino,” he adds.

For Huiskamp, Fortino also stood out as a partner for its track record in SaaS and deep understanding of the nuances of enterprise software. “Their approach was very founder-friendly, and they took the time to understand our business. They had a strong cultural fit with our team,” he adds.

Voskuilen says he agrees with Matthijs that a strong personal connection was a key selection criterion for them when choosing their VC. “We were looking for a VC partner that has the same mindset and dedication as us. Someone with a lot of hunger for success.”

Rozencwajg further explains that they chose Fortino Capital because of its ability to support the follow-on rounds, the geographical presence and proximity played a key role as well. “Especially for a company like D2X operating in the crypto industry, a lot of the potential investors will be less sophisticated, based in offshore jurisdictions, and so on,” he says, adding, “Something we really liked was Fortino’s backing from the EU. That’s always a really good sign.”

“When it comes to selecting your VC investor, we always recommend founders to prioritise the personal connection they feel with someone over the brand and track record of a VC,” says Goosens. He adds, “Moreover, we believe founders should avoid surrounding themselves with ‘cheerleaders’ and look for VCs that dare to challenge and help them to see things they may not see themselves.”

The way of working with VCs

One thing is clear: VCs not only bring money but also expertise and network and help founders scale their businesses or steer them towards the right path. How do they expect these founders to engage? Rozencwajg says it depends on the stage of the startup. “I would say that the later stage you are, the less interaction you have with your VCs,” he explains.

Rozencwajg elaborates that they update their investors at least once per quarter and have switched to monthly updates for their largest shareholders. He further adds that they interact frequently to seek out advice “when we feel like we could use an external point of view on something.”

Altura’s Huiskamp says their interaction with its VC investors is regular through monthly check-ins or specific strategy sessions to overcome challenges or explore opportunities. “The expectation is that we maintain an open line of communication, ensuring they are up to date with our progress, but it’s a collaborative, supportive relationship rather than overly prescriptive,” he quips.

Voskuilen mentions that they have formal investor update meetings once every month, but there are multiple touchpoints throughout the week to discuss all kinds of ad hoc matters, often using voice messages over WhatsApp.

No relationship is without its fair share of friction, and the founder-VC relationship can get fraught fast. “Just like any relationship, there are moments where even when incentives are fully aligned, there are disagreements, and that’s okay,” Rozencwajg tells me.

Rozencwajg adds, “I think friction happens in these moments, where, for example, the company is undergoing a Series A fundraise, and there’s a time sensitivity element to it. Then, sometimes, not everyone sees eye-to-eye in terms of how to run a process. It was also a learning experience for us.”

Huiskamp says they have been in situations where priorities and approaches didn’t perfectly align. He gives an example of a situation where their VC partner pushed them to spend money differently or had a different view on growth paths. “However, these moments of friction have led to productive discussions that helped us find the right balance,” he adds.

Is there a way to overcome this fractious moment? Huiskamp, Rozencwajg and Voskuilen are unanimous in their view that communication is key to overcoming this challenge. They say both the founder and VC partner must ensure transparency and foster open communication, and as a team that is unified to solve world problems, these communication challenges are just another problem-solving exercise.

Goossens comments, “For us, the founder-VC relationship starts with trust and transparency – good news should travel fast, but bad news even faster. Moreover, we are firm believers in the ability to out-execute competition, which is what we seek from founders, and such a mindset is what founders can count on when partnering with us.”