Alex Banks

I’ve spoken to over 2 dozen MDs at PE firms I can confidently say that the arb of figuring out how to implement Vertical AI at portfolio companies is very real right now It will fundamentally change underwriting for those who can do it predictably and unlock generational returns. Most are aware they need to act. Very few have.

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VCs and Founders Urgently Need a Translator I have never wasted more time than I did as a founder trying to crack the code on how to position my startup for venture capital. And now, as a VC, I’m drowning in words, searching for the few details that actually matter. The disconnect between founders and investors isn’t just frustrating—it’s a structural inefficiency that wastes time, capital, and opportunity. (IMO- This disconnect is the key driver of bias in venture capital.) The VC’s Perspective: Hunting for a Needle in a Haystack A VC hears hundreds of pitches a year, sifting through a flood of narratives, metrics. Here’s the problem: founders don’t know what investors actually need to hear. Instead of delivering a crisp, compelling case, they bury their investment thesis under layers of unnecessary detail. I’ve never felt more frantic than at the end of a 30-minute pitch meeting with a founder and startup I love, glancing at my notes and realizing I haven’t captured the key elements. Too often, founders overcorrect by shoving everything and the kitchen sink into their pitch, hoping more information will make their case stronger. It doesn’t. The ones who can distill their business into investor terms immediately stand out. The Founder’s Perspective: Running Blind On the other side of the table, founders are flying blind. Venture is notoriously opaque, and most investors give vague, useless feedback. Founders walk away with no real insight into what went wrong. The reality? A large majority of VCs call founders who aren’t fluent in venture capital "trash." The number one predictor of whether or not a founder will raise venture is not traction, team, or product. It’s whether a founder is white, male, and went to Stanford. The system is broken, and I’m sick and tired of hearing that fundraising information is “googleable.” It’s not. Fundraising is the least transparent, most gatekept process I’ve encountered in two decades deep in the startup trenches. Without access to real, structured education on how venture capital works, founders are forced to guess what investors want—leading to overexplaining, overjustifying, and overcomplicating. The Fix: Translating Founder Speak into Investor Speak The only way to address bias in venture capital is by equalizing access to transparent education on how venture capital works. Venture capital will never escape its overwhelming bias toward funding white men if it continues to treat the 99% of founders who aren’t already fluent in VC as beneath them. At the same time, founders who expect a big fat check without demonstrating clear traction and market opportunity will always fail. There are no handouts in life. If venture capital truly wants to back the best founders it simply needs to start by making the rules clear and accessible to everyone. Founder VC #VentureCapital #FundraisingTransparency #Startups #BiasInFunding #FounderEducation

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One of the leading pre-seed VCs in the UK recently made their Term Sheet publicly available. It brought up a topic that I've been meaning to post about for a while: What are the circumstances where it would be acceptable for a founder to lose their entire shareholding (i.e. be a bad leaver). This is a hotly negotiated topic, especially if you work with good lawyers. The starting position of the pre-seed fund in question is not uncommon across the whole VC industry (in fact the majority of funds have similar wording) but a position that I believe is entirely unreasonable and deserves a significant update. Three conditions I disagree with: 1️⃣ 'material breach of the employment contract' At first read, this might sound reasonable - but it includes things like meeting your responsibilities (which are constantly changing as a founder), standards of behaviour and work ethic, attendance at key meetings, reporting requirements like updating your data policies, misuse of company laptop for personal use, etc Should these really result in losing all your shares? 2️⃣ Resigns within 24 months For example, if you experience a serious illness and have to leave the business. 3️⃣ Commits a criminal offence (other than road traffic offence) If you dive into this clause, it's actually laughable that only a road traffic offence is an exception. As a reminder, here are some ways someone in the UK can receive a criminal offence: - Swearing in public - Being drunk in a pub - Cycling on the pavement - Not paying for a plastic bag in a shop - Not paying for your TV licence - Letting your garden become overgrown (lol) - Sending a letter without a stamp (lol^2) - Carrying a plank of wood on the pavement - More recently, posting an offensive memes on X You get the picture. Are these usually enforced? No. But does that matter if your livelihood is on the line? Can you rely on your investor's trustworthiness to be 'reasonable'? Perhaps, but investors change jobs (on average every 3 years), and you never know what your relationship will be like 5 years down the line. Does it even matter at pre-seed? Well, you're setting a precedent for future rounds where VCs often follow your terms if they are 'market'. How to fix them? ✅ Fortunately, there are very simple changes to be made. 1️⃣ Select the items from the employment contract that are reasonable to include. For example, if you start a competitor whilst working, you lose all your shares. 2️⃣ Remove or add in an intermediate leaver definition 3️⃣ Update the wording to include a criminal offence which has a specific negative impact on the business. Cycling on the pavement (technically a criminal offence although rarely enforced) should never result in the possibility that your entire shareholding is at risk. 🤨 Am I being unreasonable? Do you agree 'market' bad leaver terms should be changed?

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