Also, as an ecosystem, we have to be careful of bad actors and weed them out fast, because if the trust is gone, it affects everyone. Oo Nwoye, TechCircles founder and longtime African tech pundit, said to Techcabal.
VCs may have their hands tied
From the outside, one can imagine VCs at the top of the ecosystem pyramid, controlling the flow of funds and immune from the antics of founders.
Where accountability and integrity become questionable, VCs are backed into really tight positionsand bleed a lot of dollars.
According to the general manager quoted above, VCs contracts with foundersterm sheetsonly protect the investments made by the VC firms, but do not hedge against scams and other unethical practices. This puts VCs in a difficult situation, and the checklist is a response to these concerns, he said.
For the local VCs involved, collaboration has become key as they strive to attain the common goal of evading bad actors.
The common thread from these sources, all of whom asked to remain anonymous, is that VCs have borne the brunt of unethical founders who see venture money as a private chest and a ticket to a better life. Why would I raise capital for a founder to build personal houses abroad in the name of offices the aforementioned GP asked.
When asked how VC firms are unable to spot such questionable founders during their due diligence processes, the GP said, Most VCs only do their due diligence before they invest.
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