How to Take Advantage of Entrepreneurs
A former big-firm VC explains how good intentions, bad incentives, and industry norms can subtly work against founders.
If you want to take advantage of entrepreneurs, there are a few tried-and-true moves. They’re subtle. They’re institutionalized. And best of all (for the wrong reasons), they’re often invisible to the very people they affect.
This playbook has become known to me over my 15 years as VC investor, many of those inside a large VC firm. This is not a hit piece. It’s a love letter—with footnotes—to entrepreneurs, written by someone who’s watched the machinery up close.
This post is not actually about how to take advantage of entrepreneurs. It’s about how the system quietly does it—and how well-meaning people sometimes participate without even realizing it.
Let’s begin the playbook:
1. Make Everyone a “Partner” (Except in the Ways That Matter)
If you really want to confuse entrepreneurs, teach them a faulty lesson early: “Only talk to partners.”
This advice gets passed around accelerators, founder Slack groups, and warm-intro folklore like it’s gospel. And it’s… wrong.
Any good salesperson knows to map the decision-making unit. Who can be a champion? Who can guide you? Who understands the internal dynamics? In venture, that person is very often an associate or senior associate.
Speaking from experience: I spent several years as an associate at a large VC firm, working alongside more senior folks like Principals, Partners, and General Partners. Within this larger construct, I helped several first-time entrepreneurs navigate partnership dynamics, timing, objections, and internal politics to secure top-tier funding on their path to massive outcomes. I was useful. This includes deals like Rocket Lab’s 2014 Series B (now a $40 billion public company - see our 2014 investment memo), Auth0’s seed (later a $6.5 billion sale - see our 2014 investment memo) — serving as a sort of “inside man” for Pete at Rocket Lab and Jon/Eugenio at Auth0’s (despite not being a partner at the time).
However, once entrepreneurs are trained to say “I only want to talk to a partner,” the incentives flip.
So VC firms respond rationally: promote everyone to partner—in title only.
Over time, most large VC firms went ahead and re-titled associates and principals as “Partner”. Voilà. Every meeting is now with a “partner.”
The catch?
Partner no longer means decision-maker, shared upside, or the ability to truly sponsor a deal.
Entrepreneurs weren’t actually seeking a title. They were asking for agency but now must work even harder to decipher what is really going inside a large VC firm’s organization.
2. Use Friendly, Minimal Term Sheets (And Decide Later)
The final milestone of an entrepreneur’s fundraising process is receiving an investment offer from a VC in the form of a term sheet. And nothing says “we’re aligned” like a one-page term sheet.
It feels clean. Founder-friendly. Modern. Almost European.
It’s also an excellent way to defer all the decisions that actually matter.
Control terms. Protective provisions. Board dynamics. Information rights. Future financings. All of that gets punted into the definitive documents—written after the founder has signed exclusivity.
Here’s the part most entrepreneurs learn too late: The only consistently binding clause in a term sheet is no-shop.
For ~30 days, the founder halts all conversations with other investors. The VC firm? Free to keep thinking. Or not thinking. Or renegotiating.
If your goal were to take advantage of entrepreneurs, this asymmetry would be a feature, not a bug. Vagueness in a term sheet usually benefits the VC, not the entrepreneur, so it’s prudent for entrepreneurs to hammer out more deal terms and push for a more fleshed out term sheet before signing.
A Kinder Ending (Because That’s the Point)
Most VCs are not trying to take advantage of entrepreneurs. Many are former founders themselves. Many genuinely care.
But systems have gravity. Titles drift. Incentives calcify. And entrepreneurs—especially first-time ones—pay the tuition.
If you’re a founder: talk to the whole firm. Associates included. Ask who can truly champion you. Read past the page count of a term sheet. Understand when exclusivity starts—and what you get in return.
If you’re a VC: be precise with titles, clear with intent, and honest about power. Kindness scales better than cleverness.
I’ve written before about what you’ll never hear from a solo GP, and why we chose this high-alignment model for Ubiquity Ventures. This post is the companion piece—the one that says the quiet parts out loud, with respect.
Because the best way not to take advantage of entrepreneurs is to first understand how it happens.
Ubiquity Ventures — led by Sunil Nagaraj — is a seed-stage venture capital firm focused on startups solving real-world physical problems with "software beyond the screen", often using smart hardware or machine learning.
If your startup fits this description, reach out to us.
The title’s cheeky, but the substance hits hard, especially the part about title inflation. According to PitchBook, over 60% of large VC firms now give “Partner” titles to non-decision makers, which makes your point about real agency all the more relevant.
What’s one red flag you think first-time founders still consistently miss in those early conversations?