Startup 2 Standup 
Five practical takeaways
- Understand the returns VCs need before deciding whether your business fits their model.
- Look beyond valuation and understand what different share rights mean.
- Think through what repeated funding rounds could do to ownership and control.
- Treat an investor as a long-term shareholder, not simply a source of money.
- Ask whether AI could help you get further with customers, sales and profit before taking investment.
Summary
During our session, Modwenna Rees-Mogg challenged several assumptions founders make about venture capital. She explained VC returns, preferred shares, dilution, investor relationships and why VC is only one route to building value.
Introduction
The discussion kept returning to a practical question: what are founders actually agreeing to when they take venture capital?
Modwenna did not argue that founders should avoid VC. She explained that it can be the right route for some businesses, but founders need to understand the economics, ownership implications and long-term relationship before deciding to play that game.
Takeaway 1: Understand the game VCs are playing
Modwenna explained that, in the VC model she was describing, investors are managing capital they need to return to others and are looking for exceptional winners.
That changes the founder-investor dynamic. The investor needs businesses capable of delivering the type of return its fund is seeking.
A useful question founders can ask themselves is: does my business genuinely fit the VC model? VC is a specific model with a specific objective.
Takeaway 2: Look beyond the headline valuation
Modwenna explained how preferred shareholders may receive money before ordinary shareholders when capital is distributed.
That means owning a percentage of a company does not automatically tell you what you will receive if the business is eventually sold.
A useful question founders can ask themselves is: if the business is sold, who gets paid before me? The share terms matter alongside the valuation.
Takeaway 3: Think beyond one funding round
Modwenna warned founders not to view one investment round in isolation.
Further rounds can reduce founder ownership, while institutional investment can also bring greater investor influence over the company.
A useful question founders can ask themselves is: what could my ownership and control look like after several funding rounds?
The point was not that dilution is always wrong. It was that founders should understand the longer journey they are signing up for.
Takeaway 4: Work backwards from the exit
One of Modwenna’s clearest points was that venture economics ultimately connect back to the potential exit.
She explained that some buyers can justify paying more because their scale, customers or distribution could make an acquired business much more valuable in their hands.
A useful question founders can ask themselves is: who could eventually buy this business, and what could it become worth in their hands? A large exit is not magic. The buyer has its own economic reason for paying the price.
Takeaway 5: Treat investors as long-term shareholders
Modwenna encouraged founders to think of investors as co-shareholders rather than simply sources of money.
These relationships can last for years. She also warned that the person a founder first meets may not necessarily be the person who later represents that investor on the board.
One founder in the discussion encouraged founders to carry out their own due diligence and speak with companies already in an investor’s portfolio.
A useful question founders can ask themselves is: would I still want this investor beside me when things become difficult?
Takeaway 6: VC is not the only route to value
The discussion challenged the idea that fundraising or public markets automatically define success.
Modwenna shared the example of a family-owned company she had worked with that had lasted around 400 years, highlighting continuity, cross-ownership, culture and succession.
Her wider point was that there are different models for building a valuable business.
A useful question founders can ask themselves is: are we raising because the business needs VC, or because we have assumed VC is the route we should take?
Takeaway 7: AI may let some founders get further before raising
Modwenna argued that AI is changing how far some software and service businesses can get with limited resources before taking investment.
She separated this from businesses with heavy physical manufacturing requirements and encouraged founders to think differently about what they can now achieve before raising.
A useful question founders can ask themselves is: how much further could we get with customers, sales and profit before we raise?
What questions did founders bring into the room?
One founder asked whether PISCES and private secondary markets could give founders another route to exit and greater liquidity.
Another asked what had helped the 400-year-old family company continue across generations. The final discussion also raised whether founders fully understand the potential pitfalls of taking VC money before they raise it.
Continue the conversation with SU2SU
If you are already a member, questions like these can be brought into our Founder Surgery sessions.
Founders can also watch Modwenna’s full session, explore the Startup 2 Standup YouTube channel, browse our previous guest-speaker sessions.
Our current membership information also includes Knowledge Bank access alongside the wider founder community. Founders can explore membership, while organisations interested in workshops and conversations with the community can view our sponsorship opportunities.
Our role is not to replace specialist advice. It is to bring founders into the room with people who understand the questions.
Conclusion
What we took away was that the real question is whether the economics, ownership journey, investor relationship and eventual exit fit the business you actually want to build.
If you are already a member, bring the question into a Founder Surgery. You can also watch the full session or explore Startup 2 Standup membership to continue the conversation with founders and specialists who understand the challenge.
FAQs
Can founders sell shares during later funding rounds?
Possibly. Modwenna stressed that founders should not assume they will always be allowed to sell some of their shares as later rounds take place.
Will the same VC contact always stay involved?
Not necessarily. Modwenna warned that the person a founder first meets may not be the person who later represents the investor on the board.
Is an IPO automatically the best exit?
No. During the discussion, founders and Modwenna challenged the idea that an IPO should automatically be treated as the “holy grail”. It is one possible route, not the only one.
What did Modwenna say about changing shareholdings without professional advice?
Modwenna warned founders to take changes to shareholdings seriously and encouraged them to work with lawyers and advisers who can properly advise on the potential consequences.
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