In the VC world, it doesn’t pay to become known as a troublemaker. The industry is small, memories are long and you never know when you might want to work or do a deal with another investor.
That means it takes a lot of bravery — or, in some people’s eyes, foolishness — to speak up about bad behaviour.
Last week, Sifted published allegations of sexual harassment by Nenad Marovac, an award-winning investor and founding partner of London-based VC firm DN Capital. (DN and Marovac deny the allegations, and the fund tells Sifted it has set up an externally-led investigation into the claims.)
Dozens of readers got in touch with us in response to the piece.
For some, it raised the question as to whether LPs (the investors in VC firms) could (or should) be doing more due diligence on workplace culture at VC firms.
We asked several investors what they thought and many said that LP due diligence — as it’s currently conducted — is important, yes, but unlikely to ever uncover something that former or current employees don’t want to share.
Why? Because it’s mostly just not in their interest (financially, or reputationally) to blow the whistle.
“People want to get jobs in VC and it's very hard to get a job in VC. When you get one, it's not in your interest to speak out when you're actually at the fund. But then afterwards, it's not really in your interest either,” one male VC partner told Sifted.
Funds can, after all, choose to withhold carry payments from former or current employees who are in their bad books.
“It’s not a lack of DD,” a female investor added. “It’s people’s fear of being honest.”
Others saw room for improvement, suggesting that LPs could demand better policies to keep whistleblowers anonymous.
“Making sure that they have the right setup internally should be part of the DD,” said the male VC partner. “It should be something the LPs ask: ‘What's your policy that allows employees to whistle blow?’”
— Amy Lewin, editor