"It's very important because VC funds are always scoring in their heads: if I’ve invested in 20 or 40 companies, which ones are the home runs that return the portfolio more? Which ones do I want to support because they have a shot? Which ones do I delegate because I don’t want to spend time there? Or who am I going to ghost? They won’t do anything so brutal as saying, “Hey we deprioritized you.” They won’t say that out loud because it feels bad and sounds bad. You never know the startup might figure it out after three or four years and suddenly take off like a rocket ship, and then the VC comes back and says, “Hey, we’ve always been supportive of you and we love you so much.” The founder knows, “Okay, you ghosted me for three years.” That’s the industry norm." - Jeremy Au, Host of BRAVE Southeast Asia Tech Podcast


"The key thing is imagine you’re a VC looking at your portfolio and asking, am I going to put my money into supporting companies that are losers? No. My unicorns don’t need much help because they don’t even return my calls now; they’re everywhere and doing fine. My large wins are also doing well and don’t really need me, but maybe I can push them a little more and they become unicorn outcomes. Then the small wins can I push them higher? VCs concentrate their resources in the band of companies they believe can turn into small wins or large wins." - Jeremy Au, Host of BRAVE Southeast Asia Tech Podcast


"A very underrated art is portfolio management. Even after deciding where to put the first check, a VC reassesses multiple times and asks, “Do I want to spend more time on this company? Are they on track or off track?” They must allocate time, resources, and attention. If after two years a startup keeps asking for help and the VC decides it won’t make it, the VC can tell the head of recruitment, “Please deprioritize this company. Save your time for companies that can be home runs.” This is a brutal mechanic most founders don’t see: even after investment, partners continue judging them throughout the time frame." - Jeremy Au, Host of BRAVE Southeast Asia Tech Podcast

Jeremy Au breaks down how venture capital really works after the check clears. He explains how VCs silently re-rank startups every year, why most companies get deprioritized, and how a tiny number of winners carry an entire fund. The discussion covers angel buyouts, secondaries, IPO strategy, and the tension between founders and boards during exits. It’s a candid look at portfolio math, hidden incentives, and the survival rules founders rarely hear out loud.

01:47 The Hidden VC Scoreboard: Investment does not end evaluation. Partners continuously judge companies and shift attention toward expected winners.

04:45 The Brutal Portfolio Math: Most companies fail, a few return small wins, and one or two generate the 50x outcomes that power the entire fund.

06:20 Every Round Is a New Test: Each funding round resets conviction as investors decide whether to double down or step back.

13:25 Founder Vision vs. Board Incentives: Acquisition decisions split control from economics  founders want long-term vision while boards optimize for return timing.

Jeremy Au: There’s a good segue into the next section. For Angels, because they are very small and minority shareholders, when the late-stage investors come in, the late-stage investors will normally buy out the early-stage investors or give an offer to buy them out.

The reason why is because, for example, you need to clean up the cap table because you often need everybody's signature to get documents done. The more of these people who have 1% or 0.5%—whatever it is—if you can buy them out, it is less admin for the founders, so the founders like it in general. Secondly, Angels might want to do something like buy a house or do something else with the money, and it has already been locked up for six or seven years. Waiting for another 2, 3, 4, 5, 6, 7, or 8 years may be too long for them. So, oftentimes, there is effectively a buyout of these Angels by late-stage investors.

So, there’s a good segue into the next section, which is exit management. We're just going to go straight into it. When we think about founders, startups, and VCs, you must understand that VCs often are in two camps. They often think about two things: one is how do we add value? This is your board work, your strategy, your compliance—all the value-add stuff.

But a very underrated art is really the art of portfolio management. Even after the judgment of whether to put that first check in, there will be multiple times that the VC will reassess and say to themselves, "Okay, do I want to spend more time on this company? Are they on track? Are they off track?". They have to allocate their own time, resources, and attention.

There's a little bit of yin and yang because if the VC, after two years, sees a startup that has been asking for lots of help but isn't making progress, the VC might say, "I don't think you're going to make it." The VC can tell the head of recruitment to deprioritize that company because, even though they’re helping them a lot, they don’t think they’re ever going to make it. You need to save time to help the companies that are going to be actual home runs.

This is actually a very brutal mechanic that most founders are not aware of: even when they have been invested in, the partners continue to judge them during this timeframe. It’s very important because VC funds are always scoring their hits. If I’ve invested in 20 or 40 companies, which ones are the home runs that are going to be able to return my portfolio? Which ones do I want to support because they have a shot? Which ones do I want to delegate because I don’t want to spend my time there? Or who am I going to ghost?

They won’t do anything so brutal as saying out loud, "Hey, we deprioritized you," because it feels and sounds bad. You never know—the startup might figure it out after three or four years and suddenly become a rocket ship. Then the VC will come back and say, "Hey, we’ve always been supportive of you and we love you so much." And then the founder knows that the VC ghosted them for three years.

But that’s kind of the industry norm. One of the paradoxes that often happens is that the companies doing the best—the rocket ships—don't seem to require that much help because they snowball capital, raise more capital, and everybody wants to help them. The media wants to help them; they’re all over the bus stops. Conversely, the worst performers tend to ask for the most help because they’re struggling. VCs often find themselves trying to make that prioritization in the gray zone—the companies that they feel, if they put in more effort and time, can cross the hurdle from barely making it to eventually becoming a home run.

For example, imagine a VC fund where your strategy is 20 startups in every fund. Let's say you're now on fund number five, so you've done 100 startups. Or conversely, you could be a VC fund investing in 40 startups and you are now halfway through deploying your third fund. Either way, both have a portfolio of 100 companies.

Imagine at a specific moment in time—maybe year three or four—you see that out of those 100 companies, 50 of them are going to fail. We thought they’d make it, but 50 of them are going to be a loss. For 25 of them, we think, "Maybe we can save it." We can get some theoretical percentage value—maybe 5%, 10%, or 20%—back. We get some capital back, but not our full principle. A "small win" could be getting our same dollar value back or a little bit more. A "large win" could be a 15x return, such as an acquisition. And then you can imagine there are one or two companies out of 100 that will generate a 50x return.

In this scenario (50 losses, 25 saves, 18 small wins, 5 large wins, and 2 unicorns), that would generate a return of 2.4x. That’s about 10% to 20% or 30% depending on your time horizon. But the key thing is: if you’re a VC, you’re not going to put your money into supporting the "losers." My unicorns don’t really need a lot of help; they don’t even return my calls now because they are on Forbes 30 Under 30 and everywhere. My large wins are also doing really well. They don’t really need me, but maybe I can push them a little bit more to become a unicorn outcome. Or can I push the small wins a bit more? They are concentrating their resources on the band they think can become small or large wins.

A really good example of this is Instacart and its IPO. Every startup goes through multiple rounds. Instacart received funding from the Seed round to A, B, C, D, E, F, and a tender offer. Then G, H, I, and then they went for the IPO. Every round is an opportunity to double down, inject more capital, or do pro-rata (maintaining your ownership stake by putting in more money). Or you can skip it and not invest at all.

From 2012 to 2021, you can see the equity pricing—the price of the shares—at each point in time. Versus the eventual IPO price, you can see the return on that investment. If you bought it at $75 and the IPO was effectively $9,000, you made money. But if you bought it for $39,000 and the IPO was at $9,000, you lost money on those shares. You are also competing against what that money could have earned if it were in the S&P 500 index fund.

In the Seed round, it was Khosla Ventures, Canaan, and Y Combinator. Y Combinator follows a widespread "40-investment" thesis, whereas Khosla and Canaan are more focused "20-startup" bets. They came in for the Seed round at $35. Sequoia came in one year later for a concentrated Series A bet at $75. Then Andreessen Horowitz and Heroic Ventures came in at $930. These folks all made more than a 30% to 60% net IRR profile.

What's interesting is that Sequoia came in 2013 but could have come in for Series B. When the price went up to $930, they could have bought in again. Hindsight is 20/20, but Khosla, Canaan, and Sequoia could have all doubled down in the earlier rounds and made more money.

In Series C, you see Kleiner Perkins and Valiant, but then Sequoia and Y Combinator come back for Series D at effectively $6,000. Imagine—every year there is a fundraising round where they say "no," and then eventually they decide "now we should do it." Then you see Coatue, D1 Capital, and Tiger Global. D1 came in for Series F, then a tender offer, and then they skipped the 2020 Series G. They invested again in the Series H at $19,000. They doubled down across three rounds. Sequoia came in three times: Series A, Series D, and the latest Series I.

As we talked about, a fund like Sequoia is a multi-stage fund; they can do the seed, the growth rounds, and the pre-IPO rounds. All of these VCs are smart and looking at data, financials, and the founding team. You could argue that Canaan and Khosla should have doubled down early, or that D1 should not have doubled down in those later stages.

Imagine being on the board for ten years and making the decision every year: "Should we put in more money or skip it?" Khosla and Canaan made a lot of capital, but they were investing in much riskier pre-seed or seed companies with a higher risk of failure. The people investing in the later stages before the IPO felt there was much less risk of Instacart not being able to IPO.

For negative outcomes, there are normally three results:

1. Winding down: Effectively selling the assets, paying off creditors, and returning remaining capital to shareholders (liquidating).
2. Acqui-hire: The company is acquired by another company for the leadership team rather than the assets or IP.
3. Cash out: These are "zombie companies"—they won't become unicorns but are profitable. The founders may decide to buy out their investors.

Regarding secondaries: you may choose to sell your stake to another VC fund. This is often done to provide liquidity. One version is an internal secondary where an angel investor sells their stake to a new incoming late-stage investor. There are also secondary markets where people can supposedly sell stock in private companies like OpenAI, SpaceX, or Tesla. A SpaceX employee might have shares and enter a legal agreement to sell them if there is a liquidation.

Secondary markets can be very opaque, with many middlemen and brokers. There’s a lot of demand, but it may not be above board. People may bail or pledge shares to multiple people. Generally, there are direct secondaries versus "under the table" secondaries.

Regarding acquisitions and mergers: companies can acquire one another using cash or stock. Consider two different stories: the founder of Instagram sold to Facebook. Evan Spiegel of Snapchat received a similar offer from Facebook and said no.

One could argue Instagram had a better outcome for investors because they received a large outcome in a much shorter period of time. Snapchat also received a large outcome, but it took much longer to IPO. Evan Spiegel wanted control over the vision and felt he would get a better outcome by staying in control. Today, we recognize that Snapchat is not as big as people thought it would be then. Conversely, Instagram is much larger now. Some argue that if Instagram had stayed private, it could have killed Facebook. Mark Zuckerberg would argue Instagram became a success because of Facebook’s money and distribution. The Instagram team would likely argue they could have scaled rapidly regardless and felt constrained by the Facebook "mothership."

This involves voting rights and board composition—whether they can force a sale or not. The board has different incentives than the founder; the board cares about maximizing economic value, while the founder may prioritize vision or control.

Finally, for going public, companies generally need at least a $2 to $3 billion threshold. Going public makes you available to retail investors. Investors look for high liquidity and deep capital markets, like in the US. Three Southeast Asian companies took different paths:

• GoTo: Gojek acquired Tokopedia, and GoTo listed on the Indonesia Stock Exchange (IDX).
• Grab: Listed on the Nasdaq through a SPAC (Special Purpose Acquisition Company) vehicle.
• Sea Group: (Which owns Shopee) listed on the New York Stock Exchange.

All of them have different stock prices today compared to their listing prices. Some say it's due to lack of liquidity, underperformance, or over-pricing at the initial IPO.