In a candid discussion on the StrictlyVC Download podcast, veteran venture capitalist Aileen Lee shed light on a disturbing trend in the startup ecosystem: many companies are being left to fend for themselves after being abandoned by their investors. This phenomenon is a direct consequence of the recent boom-and-bust cycle, where companies raised massive amounts of capital at unsustainable valuations, only to struggle to regain their footing.

Lee attributed this issue to the lack of mentorship and training provided to newer investors during the Zero Interest Rate Policy (ZIRP) era. As a result, these investors made a series of poor investments, which are now being orphaned. "A lot of people didn't get trained and didn't get any mentorship or apprenticeship were given checkbooks, and a lot of investments were made, and...there are a lot of orphaned companies," Lee explained.

What's more alarming is that even senior general partners who led the investments are abandoning their portfolio companies. Lee described how these partners would stop attending board meetings, leaving the startups without guidance or support. This lack of accountability is a key reason why many companies are struggling to find outside help with exit strategies, and why limited partners (LPs) should be more vocal about their frustration.

This issue is not new, and it's been happening for years. The Covid era of funding saw a surge in investments, but it also led to a lack of due diligence. As Jason Lemkin, another longtime VC, pointed out, "Shouldn't there be checks and balances? Millions and millions are invested by pension funds and universities and widows and orphans, and when you don't do any diligence on the way in, and you don't do continual diligence at a board meeting, you're kind of abrogating some of your fiduciary responsibilities to your LPs, right?"

The implications of this trend are far-reaching. Startups are not only struggling to survive but are also being denied the guidance and support they need to thrive. The lack of accountability among venture capital firms is a major concern, and it's essential for LPs to take a more active role in ensuring that their investments are being managed responsibly.

In conclusion, the abandonment of startups by their investors is a symptom of a larger problem in the venture capital industry. The lack of mentorship, due diligence, and accountability has led to a culture of reckless investing, and it's time for a change. As the industry moves forward, it's essential for venture capital firms to prioritize their responsibilities to their portfolio companies and LPs, and to work towards creating a more sustainable and responsible investment ecosystem.