Prominent founders are questioning the value of venture capital, arguing that investors often do more harm than good. While some of the criticism is justified, it overlooks a fundamental reality: without venture capital, many of the world’s most successful technology companies would never have existed.

The debate about the role of venture capital has intensified. Nik Storonsky, founder and CEO of Revolut, recently warned that venture capital investors can become dangerous when they gain too much influence over a company. He has gradually removed VC representatives from Revolut’s board and argues that investors should ideally remain financial backers without voting rights or board seats. Former Uber CEO Travis Kalanick has been even more provocative, suggesting that only 10% of VCs manage not to harm their portfolio companies and that just 1% create meaningful value.

These are striking statements from entrepreneurs who have built extraordinary businesses. But they also reveal a remarkable contradiction: some of the most successful venture-backed founders are now questioning the very financing model that helped make their success possible.

The criticism deserves attention, particularly when it comes to governance, investor incentives and excessive interference in operational decisions. Yet dismissing venture capital as an obstacle to entrepreneurship fundamentally misunderstands its economic role.

Risk Capital Is Already a Form of Value Creation

The most important contribution of venture capital is often the one most easily overlooked: providing financing when virtually nobody else is willing to take the risk.

Banks generally do not finance young technology companies without predictable revenues, collateral or positive cash flow. Traditional investors tend to avoid businesses built around unproven technologies, uncertain markets and highly speculative commercial opportunities. Venture capital exists precisely to finance these companies.

VC investors accept that a significant proportion of their investments may fail. They commit capital to companies that could take years to generate meaningful revenues, let alone profits. In return, they seek exceptional outcomes from a relatively small number of successful investments. This risk-taking supports technological progress, enables entrepreneurs to commercialise research and helps create entirely new industries.

The willingness to deploy capital under extreme uncertainty is not merely a financial transaction. It is a fundamental form of economic value creation.

Of course, founders develop products, recruit teams, attract customers and ultimately build the businesses. But without investors willing to finance these activities before commercial success becomes visible, many promising companies would never get off the ground. Measuring the contribution of VCs solely by the operational advice they provide misses the point.

Criticising VCs Is Easier Once You No Longer Need Them

There is also an uncomfortable irony in the arguments made by highly successful founders.

Revolut can negotiate financing terms from a position of extraordinary strength. Its scale, market position and ability to attract capital give its management significant bargaining power. Most early-stage founders operate in an entirely different reality.

For a young startup seeking its first institutional financing, venture capital may be the only realistic way to fund an ambitious growth strategy. Expecting investors to commit millions while surrendering virtually all governance rights is neither realistic nor particularly fair.

VCs manage capital on behalf of pension funds, endowments, family offices and other institutional investors. They have responsibilities to those investors and a legitimate interest in understanding how their capital is deployed. Board representation, information rights and certain protective provisions are reasonable elements of that relationship.

This does not justify micromanagement or excessive control. Investors should not attempt to run the daily operations of a business. But meaningful oversight is not the same as interference.

A board that includes experienced investors can provide independent judgment, challenge assumptions and help founders navigate difficult strategic decisions. Strong founders benefit from constructive disagreement, not simply from surrounding themselves with people who endorse every decision.

Good corporate governance is not an obstacle to entrepreneurship. It is one of the foundations of building a sustainable company.

The Best VCs Contribute Far More Than Money

The criticism that venture capital investors exaggerate their operational value is not entirely unfounded. Almost every VC fund promises strategic guidance, valuable networks, recruitment support and access to future financing. Not all deliver equally well.

However, the real value of a strong investor is not necessarily measured by the number of introductions made or operational recommendations provided.

Experienced VCs can help companies raise additional capital during difficult market conditions, attract senior management, navigate complex transactions and expand internationally. They can draw on lessons learned across multiple portfolio companies and market cycles. Perhaps most importantly, they can provide financial and strategic support when a business encounters serious difficulties.

Building a company is rarely a linear process. Even outstanding businesses experience setbacks, missed targets, leadership challenges and financing difficulties. Investors who remain constructive and committed during these periods can make an enormous difference.

This is particularly relevant when assessing the criticism from successful founders. Their experiences are important, but they do not necessarily represent the broader startup ecosystem. Thousands of entrepreneurs rely on investors who provide much more than a cheque, often during periods when external support matters most.

The right question is therefore not whether VCs should be involved in building companies, but how they can contribute most effectively while respecting the responsibilities of management.

Founders Have Conflicts of Interest Too

One of the weaknesses in the current debate is the implicit assumption that founders always act in the best interests of their companies, while investors primarily pursue financial returns.

Reality is considerably more complicated.

Founders may reject attractive acquisition offers because they are emotionally attached to their businesses. They may persist with unsuccessful strategies, resist necessary management changes or prioritise personal control over shareholder interests. Investors, meanwhile, may face pressures arising from fund lifecycles, return expectations or liquidation preferences.

Neither side has a monopoly on good judgment.

These potential conflicts are precisely why professional governance matters. A well-functioning board should balance different perspectives, establish accountability and ensure that major decisions are made in the long-term interests of the company.

The solution to poor investor behaviour is not to remove investors from governance altogether. It is to establish clearer responsibilities, balanced boards and appropriate safeguards against conflicts of interest.

A good VC should know when to challenge management and when to step aside. Equally, a good founder should recognise that accepting external capital also means accepting a degree of accountability.

AI Will Change Venture Capital, Not Eliminate It

Another increasingly popular argument suggests that artificial intelligence will make traditional venture financing less relevant. Smaller teams can now develop products, automate operations and reach customers with significantly fewer resources. Some software businesses may indeed require less external capital and become profitable earlier.

That is a positive development for entrepreneurship. But it does not imply that venture capital is becoming obsolete.

In fact, the opposite trend is equally visible. AI infrastructure, advanced robotics, biotechnology, semiconductor development and energy technologies require substantial investment, often long before commercial revenues emerge. Building globally competitive companies in these sectors can demand hundreds of millions or even billions in capital.

The result is likely to be a more differentiated financing landscape. Capital-efficient startups may increasingly rely on bootstrapping or smaller funding rounds, while companies developing complex technologies will continue to require substantial institutional financing.

Venture capital was never intended to be the right financing model for every company. Its strength lies in supporting businesses with exceptional growth potential and risks that traditional capital providers are unwilling to assume.

Europe Needs More Venture Capital, Not Less

The current debate is particularly relevant for Europe and Switzerland.

Europe has world-class research institutions, strong engineering capabilities and a growing pool of ambitious entrepreneurs. Yet turning scientific excellence into globally competitive technology companies remains a challenge, particularly when substantial growth capital is required.

European startups frequently depend on international investors to finance their later stages of development. Strengthening the domestic venture capital industry is therefore essential to improving Europe’s technological competitiveness and retaining more economic value.

We need larger funds, more institutional participation, experienced investment professionals and a stronger capacity to finance ambitious technologies at scale.

Of course, European VCs must continue to improve. Operational expertise, international networks, governance standards and demonstrable investment performance all matter. The industry should welcome greater scrutiny and competition.

But weakening confidence in venture capital would be counterproductive at a time when Europe urgently needs more private risk capital.

If we want European companies to compete globally in AI, robotics, life sciences and other strategic technologies, we must also build a financing ecosystem capable of supporting them throughout their development.

The Real Debate Should Be About Better Venture Capital

The criticisms raised by prominent founders should not be dismissed. Some investors overestimate their expertise, interfere excessively in management decisions or place their own fund interests ahead of those of their portfolio companies. These problems are real and deserve attention.

The VC industry also needs to remain accountable for its own performance. High portfolio valuations and impressive fundraising announcements are no substitute for realised returns and actual distributions to limited partners.

But acknowledging these weaknesses is very different from concluding that venture capital itself is the problem.

VCs provide risk capital, financial expertise, strategic guidance and access to resources that can be decisive in building internationally successful businesses. They also bring an external perspective that can protect companies from poor decisions, including those made by their founders.

The extraordinary success of companies such as Revolut and Uber should be seen, at least in part, as evidence of what venture-backed entrepreneurship can achieve.

There is something paradoxical about founders who used substantial amounts of venture capital to build global businesses now suggesting that investors should have little influence over the companies they finance.

The freedom to operate independently is often a privilege earned through success. And that success was frequently made possible by investors who were willing to take the risk long before it became obvious.

The conclusion is straightforward: We do not need less venture capital. We need more high-quality venture capital, stronger partnerships between founders and investors, and a better understanding of the respective contributions both sides make.

Venture capital is not a necessary evil. It is a critical component of an innovative, competitive economy. And especially in Europe, our priority should be to strengthen that ecosystem rather than undermine it.