The money added to the company’s coffers gets added to its valuation, so you are not trading equity really unless you are personally selling (a “secondary”). It’s just that the pie becomes larger.
Now, most VCs don’t want to be in the business of management. Each partner oversees 5-10 companies, they do not intend to be managing each. Most intervention comes when the founder is running the company into the ground. I can find many more cases of scandalous compliance by VCs than active intervention.
The first thing VCs look at is the quality of its founding team, it’s not for wanting to kick them out.
> the founder is running the company into the ground.
Except that their definition of running a company into the ground is more about whether or not the company is track to be the their 1000x return or not. They push for high-risk, high-return moves, which are not the same thing as striving for a sustainable business. I've seen founders building companies that are stable and growing, and still getting booted by the VCs because they wanted to push for higher returns.
Growing for aggressive returns is the deal you sign up for getting VC money.
That said, I haven’t seen VCs pushing a founder out for this offense first hand, even in companies approaching somewhat of a zombie status. Usually VCs will just divest their attention.
I have seen companies run into the ground with the VCs pushing the throttles forward though.
Now, most VCs don’t want to be in the business of management. Each partner oversees 5-10 companies, they do not intend to be managing each. Most intervention comes when the founder is running the company into the ground. I can find many more cases of scandalous compliance by VCs than active intervention. The first thing VCs look at is the quality of its founding team, it’s not for wanting to kick them out.