What I Wish I'd Known About Early Investors (As a First-Time Founder Who Wasn't "Supposed" to Make It)

I remember investors in the Valley in 2018 telling me "consumer health with direct payment will never work". We smiled, nodded, didn't get the money. Seven years later, guess who was wrong.

Here's the thing nobody tells you when you're a first-time founder (especially if you didn't go to Stanford, didn't work at Google, and your warm intros are basically non-existent): investors are just as fucked up and irrational as the rest of us.

They're just better at hiding it.

After 10 years of building Welltory, getting rejected by YC five times (FIVE!), becoming profitable out of necessity, and watching friends' startups either fly or crash and burn, I finally understand something.

But I've also met some incredible investors along the way. The 10-15% who are actual professionals, who respect founders, who can have honest conversations about alignment and timing. This post is about understanding the full spectrum - so you can find the good ones and avoid the... let's call them "learning experiences."

The Closet Full of Dead Startup Hoodies

Picture this: An angel investor's closet. It's full of hoodies from dead startups. Another dead startup? Just another hoodie. One more, one less.

Their entire business model EXPECTS you to fail. Like, they've done the math. The Centre for European Economic Research says venture portfolios assume 90% failure rates.

Meanwhile, you're over here having panic attacks about product-market fit at 4am, and for them? You're literally just a line item. A hoodie in waiting.

This creates what I call "value asymmetry." The value of your company to you is fundamentally different from its value to an investor. They'll write you off as a loss and not even blink. Hell, they probably already have, mentally. They're playing portfolio theory while you're playing with your actual fucking life.

(By the way, we became profitable not because we're anti-VC, but because we HAD to. Nobody would invest in a consumer health company with direct payments back then. We knew that we have to. Because you can’t build a product for consumer if your customer is an insurance company. The product will be awful. But you know what? That forced profitability became our superpower. Now we can actually choose who we want to work with.)

But wait, it gets better.

The Real Reasons They're Writing Checks (Hint: It's Not Always the Returns)

1. The "Look at Me, I'm King of the Nerds" Investor

You know what Alex Danco's brilliant analysis revealed? In Silicon Valley, angel investing is basically peacocking with money.

"Angel investors here do it not just for profit, but for status... Being the first check means getting to say: 'I believed in this team when nobody else did.'"

It's like buying a VIP ticket to the innovation show. They're paying for access, stories, bragging rights.

(Not necessarily bad! Sometimes this works in founders' favor. But you should know what you're selling besides equity.)

2. The "I Want My Son to Be a Basketball Player" Investor

This is a special breed of investor who's trying to realize their own dreams through founders. They invest in areas of personal interest, then try to steer the company toward their vision.

Why don't they just build it themselves if they have the vision and money? Because that would mean taking real risk, not just financial risk. It's easier to be a puppet master than a founder.

I've seen this play out so many times. The investor who "always wanted to do something in health tech" but never did. So now they're trying to live vicariously through you.

Research from University of New Hampshire backs this up: investors with high narcissism are 34% more likely to INCREASE investments after criticism. They literally double down on bad bets to protect their ego.

3. The "Grateful Founder" Collector

Oh, these are fun. They give you money and expect... gratitude. Forever. Like, eternal, undying gratitude.

I've heard stories that make my brain melt. One founder told me their angel - who invested $30K in seed - still expected weekly calls three years later when the company was doing millions in revenue. Same level of attention as when they were desperate.

Another founder? Their angel REQUIRED them to name a conference room after him before releasing bridge funding.

Not kidding.

Conference. Room. Naming. Rights.

For $50K.

(The conference room is apparently now called something like "The David Chen Innovation Lab." David shows up maybe once a quarter to admire his nameplate.)

4. The "I'd Rather Lose Everything Than Look Stupid" Investor

This one's my favorite because it's so spectacularly irrational.

Research shows investors would often rather lose their ENTIRE investment than earn a 3-5x return if someone else gets 6x.

Read that again.

They would rather get ZERO than get a good return that's slightly less good than their buddy's return.

One founder shared a story: acquisition offer on the table, would give angels 4x. One angel killed it. Why? He heard another portfolio company might IPO for 10x.

That company went bankrupt six months later.

The angel got zero.

But hey, at least he didn't look like the idiot who "only" got 4x, right?

The Herd Dynamics (Or: Why Everyone Suddenly Wants In After Ignoring You for Months)

Jessica Livingston from YC nailed this:

"Investors tend to be herd animals. They like you if other investors like you."

The data is fucking ridiculous. Harvard study found identical pitch decks presented as "already oversubscribed" got 58% more interest.

IDENTICAL. PITCH. DECKS.

I've heard absolutely wild stories about this. One founder got ghosted for months, then after getting a term sheet from a known fund, an investor literally faxed them a blank term sheet saying "Fill in any valuation - we're in."

Pattern Matching: The Stupidest Smart Thing They Do

Paul Graham admitted it:

"I can be tricked by anyone who looks like Zuckerberg. There was a guy we funded who was terrible. I said: 'How could he be bad? He looks like Zuckerberg!'"

At least he's honest about it.

But here's what pattern matching means for the rest of us:

• 89% of VC partners are white dudes

• If you fit the pattern (Stanford/MIT, worked at FAANG), you raise at 3.1x higher valuations

• All-female teams get 1% of VC dollars but generate 78 cents per dollar invested vs 31 cents for male teams

When I spent a month in Silicon Valley in 2018 (jet-lagged, overcaffeinated, desperate), EVERY SINGLE VC told us consumer health with direct payment was impossible. "It's a vitamin, not a painkiller." "Consumers won't pay for prevention." "Where's the enterprise play?"

But here's my favorite Silicon Valley moment. One investor - I shit you not - suggested we just hire a Stanford graduate white dude as CEO, give him 7%, and then we'd "almost guaranteed" raise money.

Just... hire a random local white dude. With the right degree. Give him 7% of our company. For his... whiteness? Stanford-ness? For being able to drink coffee anytime investor wants.

(We didn't do it. Shocking, I know.)

I collected all their advice on cards. When I laid them out, they covered literally every possible direction - a complete 360. That's when I realized: everyone was just advising what had worked for THEM, in THEIR context.

Now? Those same types of investors cite consumer revenue as a key strength for health startups.

The pattern shifted. Reality didn't.

How to Spot the Actual Professional Investors

Plot twist: they exist! And they're... completely different.

Real professional investors (the ones with, you know, actual returns) are paradoxically:

• Faster at decisions (because time is money and they're not playing games)

• More transparent ("Here's what I need to see to invest")

• Less emotionally needy (no weekly gratitude sessions required)

• More respectful of boundaries (they have their own lives, thanks)

They have LOTS of successful investments. That's the only real sign of a professional investor. It means they make lots of bets, they don't have time for bullshit, they're not using you for weird emotional needs.

They sound harsher but they're more direct and honest, and that's beautiful. You know where you stand. You can have real conversations about real challenges.

We've met some of these investors recently, and honestly? It's refreshing as fuck. They'll straight up tell you: "We like what you're building but we only write $10M+ checks and you're not there yet. Come back when you need growth capital." No games. No stringing along. Just clarity.

Or the ones who say: "This isn't our thesis, but here's what I think you should focus on to attract the right investors." And then they actually make useful intros.

Some funds even do real research — like Goodwater Capital, which runs independent user surveys, or Headline, which uses data analysis to overcome partner biases. Others, like Accel Partners, are just fast and straightforward — they tell you exactly what they’re looking for, make decisions quickly, and spare you the theater. God bless their clear, efficient souls.

These investors are maybe 10% of who you'll meet. But when you find them, you'll know.

What I Wish I'd Known (Besides "This Is All Insane")

1. Not All Money Is Equal (Duh, But Really)

That $50K angel who demands weekly calls? Let's do the math:

• Your time: 1 hour/week x 52 weeks = 52 hours/year

• Your hourly value as a founder: ~$200-500/hour

• Actual cost of that $50K: $10-25K annually in babysitting

Congrats, you just hired the world's most expensive therapist. Except they're not trained in therapy. And they give terrible advice.

2. Reference Check Them Like Your Life Depends On It

MIT research shows founder references about investors are 3x more predictive of success than investor references about founders.

Yet how many of us actually call other founders before taking money?

(I didn't. Because I was desperate and naive. Don't be like early-stage me.)

3. They're Optimizing for Different Things Than You Think

This study blew my mind: 43% of early-stage conflicts come from misaligned exit timing expectations.

You're trying to build the next Spotify. They're trying to flip you to Google in 18 months for a quick 5x.

Nobody mentions this during the honeymoon phase when they're saying shit like "we're in this for the long haul" and "we believe in your vision."

4. Emotional Intelligence > Term Sheets

The Journal of Business Venturing found "investor empathy" correlates more with startup success than check size or board seats.

But we spend 90% of negotiations on terms and 10% on "will this person make me want to jump off a bridge in year 3?"

(Hint: Year 3 is when shit gets real. Plan accordingly.)

Some Examples to Learn From

I've seen some wild shit in the founder community. Here are patterns to watch for:

The Due Diligence That Never Ends: Investors who keep asking for "just one more metric" for months. They're not serious. They're either learning about your space on your time or waiting for someone else to validate you first.

The Advisor Who Wants to Be CEO: They start as an angel, become an "advisor," then slowly try to make every decision. I've watched this destroy multiple companies.

The Strategic That Isn't: Corporate VCs who promise partnerships, intros, distribution deals. Then their internal champion leaves and you're ghosted with their money already in. One corporation wanted to invest in us and PROMISED that collaboration with them has nothing to do with it. Until final term sheet came up with a requirement of collaboration. We had to stop there. Because they are clearly people you can’t trust. But it’s because we were growing and brave at that moment. What if your runway is 2 months at that point?

But also remember, there are ...

The Good Ones: The fund that took 3 calls, made a clear decision, and explained exactly why we weren't a fit YET. The angel who invested, then checked in quarterly without drama. The VC who said "we only do B2B SaaS but I'll intro you to 3 funds that get consumer health." These people exist. They're gold.

The Part Where I Admit I'm Scared to Publish This (But Also Hopeful)

Real talk? I've rewritten this post so many times. Because there's an unspoken rule in startup land: don't bite the hand that might feed you.

Every founder fears that speaking honestly about investor dynamics will blacklist them from future funding. And you know what? Maybe it will with some investors.

But here's the thing: after 10 years, we've also met incredible investors. Professional ones who respect boundaries. Who give thoughtful feedback. Who can say "not right now" without playing games. Who actually want to help build something meaningful.

The dysfunction persists because we're all performing in this elaborate theatre where everyone pretends to know their lines but nobody's actually read the script.

So let's start actually talking about this stuff. The good AND the bad.

To My Fellow Outsiders

If you don't have warm intros to Sand Hill Road... If you're building not from Silicon Valley... If you're profitable because you had to be... If VCs keep saying your model "doesn't fit the pattern"...

This is for you.

The game isn't rigged. It's just weird. And once you understand the weirdness - the egos, the social dynamics, the fear of looking stupid, the herd mentality - you can navigate it better.

You can find the good investors. They exist. You can build relationships with funds that actually respect what you're building. You can raise money on terms that make sense for YOUR business, not their portfolio theory.

Or, you know, you can build a profitable business first and then choose your investors carefully. Or wait for the right moment. It helps.

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