As someone who has backed a sizeable number of founders, I’ve noticed a growing shift—seasoned entrepreneurs are choosing angel investors over VCs, and for good reason. I met a 1x founder recently and my conversation with him confirmed my thesis. Sharing excerpts of our conversation to explain why smart second-time founders are opting for patient capital over vanity valuations


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Founder:
Dr. Malpani, I’ve built and exited a startup before, and now I’m working on my second venture. I’ve already had offers from some big VC funds, but honestly, I’m hesitant. My friends think I’m crazy—after all, VCs have the money and the brand name. Why would I even consider raising from an angel investor or a family office?

Dr. Malpani:
I’m glad you’re thinking deeply about this. You’re actually part of a growing tribe of what I call enlightened founders—those who’ve experienced the VC rollercoaster and don’t want to repeat the mistakes of the first time. You’re right that VCs bring big cheques and big names. But the question every founder must ask is: At what cost?

Founder:
That’s exactly my dilemma. My first startup felt like I was building for the next round, not for the customer. We were constantly chasing metrics to meet investor expectations.

Dr. Malpani:
That’s the classic VC trap. Once you take money from a traditional VC, you’re on the “grow at any cost” treadmill. VCs have fund lifecycles. They must show their LPs returns within 7 to 10 years. That urgency becomes your urgency. You get locked into aggressive growth expectations, forced to raise round after round every few months just to stay alive. Founders spend more time pitching to investors than talking to customers.

Founder:
That was me! I remember being in endless fundraising cycles. We hit great vanity metrics, but I always had this sinking feeling that we were building a hollow company.

Dr. Malpani:
Exactly. Startups like that often collapse when the funding dries up because the fundamentals were never strong. Even worse, founders suffer excessive dilution. They lose control of their own company and vision. The business starts serving investor goals instead of customer needs.

Founder:
That’s why I want to do it differently this time. I’ve built personal wealth; I don’t want to run after vanity valuations. I want to build a business that grows steadily, sustainably, and ethically.

Dr. Malpani:
That’s where Malpani Ventures comes in. We love frugal founders who play the long game. Our capital is patient capital. We invest not just money, but trust and time. We behave like business partners, not overlords. Our community of portfolio founders is a close-knit group of people just like you—second-time or mature entrepreneurs who want to build healthy, profitable, scalable businesses at their own pace.

Founder:
That sounds refreshing! I’ve heard horror stories of founders being pushed by VCs to do unnatural mergers or pivot wildly just to chase growth targets.

Dr. Malpani:
Unfortunately, that happens often. Many VCs treat startups like lottery tickets—they need a few big wins to cover their losses, so they push every founder hard. We don’t believe in that. We fund businesses that put the customer first, not the investor. We encourage founders to bootstrap as much as possible, to stay lean, and to focus on product-market fit over premature scaling.

Founder:
That’s exactly the philosophy I want to follow this time. I’m tired of the vanity game. I want a partner who understands that sustainable growth is the only real growth.

Dr. Malpani:
You’ve nailed it. Raising less and staying in control is a superpower, not a weakness. And the beauty is, when you do eventually choose to raise larger rounds, you’ll do so from a position of strength—with a profitable business that investors will respect.

While I have you engaged in the conversation, I want to quickly take your attention to a recent podcast by Kushal Lodha I was invited to. I share my views on VCs, edtech, coaching classes, IVF and more

(returning back to the conversation)
At Malpani Ventures, we believe that not every company needs to become a unicorn. A solid, ethical, customer-first business that lasts for decades is a far more valuable legacy.

Founder:
Thank you, Dr. Malpani. I’m convinced. I’d rather have patient capital and build on my own terms this time.

Dr. Malpani:
That’s the founder mindset we love. We’re always here to support entrepreneurs like you.

Want to learn more about bootstrapping and creating sustainable businesses? Explore more insights and resources for entrepreneurs at www.malpaniventures.com. Let’s build businesses that put customers first!