TL;DR - VCs don’t want to fire CEOs, but will if they are incompetent and unwilling to improve.
Helpfulness - 4
Topic Tags - CEO, conflict, remove CEO, incentives, repudiatory breach, investor relationships
- What causes a CEO to be fired?
- When do VCs want to fire a CEO?
- Why are firings of a CEO problematic?
- What is a “repudiatory breach”?
- VCs do not want to fire CEOs, and it is not all that common in the industry. Firing CEOs hurts the startup and the investment made by the VC, costing the VC a lot.
- CEOs will be fired in the case of a repudiatory breach. Examples include discrimination, inappropriate sexual conduct, criminal offense, and harassing employees.
- A VC will remove CEOs when they are both incompetent, dishonest, and unwilling to change. Incompetence alone is often not enough to incentivize a VC to remove a CEO.
- CEOs who hide data and refuse to work with investors can be fired.
- VCs want the startup to do well, they will connect CEOs with powerful people, provide assistance, and try and maintain positive investor relationships.
- CEOs not accepting that the startup is not doing well is a bad sign for all parties.