Michael Mignano Shares Story of VC's 'False Commitment' in Leading Investment
Renowned VC Michael Mignano posted about pitching a project to a full partner at a large well-known venture capital firm, who verbally committed after the meeting, saying "We're in, we want to lead," and promised to provide terms soon.
After a week of silence and evading calls, two weeks later, the firm proposed an absurd term of 55% equity in the company with no willingness to negotiate, seen as a subtle way to decline the deal.
In market mechanisms, startup founders buy into a transparent and efficient financing process while selling out to VC's delaying tactics and lowball offers; the event prompted Mignano to publicly share that funds flow towards VCs who make quick, sincere decisions and collaborate effectively, while larger firms that rely on tactical games face pressure.
Source: Public Information
ABAB AI Insight
Michael Mignano has been active in the Silicon Valley investment scene for a long time, and this sharing continues his observation of behavior patterns in the VC industry, reflecting how some large firms use a 'soft rejection' strategy during high competition or internal process changes, delaying time through verbal commitments and ultimately exiting with unacceptable terms to avoid saying no directly.
In terms of capital pathways, the partner quickly committed to grab the founder's attention, then effectively passed through extreme terms, possibly motivated by reassessing risks or internal dissent, strategically exposing issues of information asymmetry and trust costs in early financing.
Similar to common cases of ghosting or lowball offers in the VC industry, the current financing environment is in a more cautious phase following the AI boom, and founders need to be wary of such tactics to protect their time and valuation bottom line.
Essentially, this reflects capital concentration: VCs replace direct rejection with delays and extreme offers, which reduces their commitment risk but increases the opportunity cost for founders, pushing early financing from relationship dependency towards a more transparent and rapid matching reconstruction, testing the trust mechanisms and decision-making efficiency of both parties.
ABAB News · Cognitive Law
Verbal commitments are easy, extreme terms reveal true intentions, and delays serve as a subtle rejection leverage.
When VCs encounter founders' time, transparent decision-making surpasses tactical consumption.
In the financing market, those who establish trust first gain efficient capital, and those who avoid lowball tactics first control time and valuation pricing power.