One of my investments got acquired at a small loss. A co-investor flamed the founder over it. Never do this.

If you invest in startups, most of them will fail. Some investors run wild, writing angry e-mails or even filing lawsuits.

This is gross and counterproductive. Here’s how to handle it instead…

What Not to Do

When a company fails or has a less-than-awesome outcome, never flame the founder with angry messages. It’s mean and it makes you look like an ass.

Let’s take the example above. The co-investor wrote a furious e-mail to the founder after the acquisition, accusing him of giving up too easily.

What that investor didn’t know is that the founder had worked day and night and even lost a very important romantic relationship while trying to make the company work.

I knew those things because I talked to the founder.

You should also never badmouth a founder because they failed. It’s unfair, petty, and accomplishes nothing.

And for goodness’ sake, don’t sue. Unless there is some sort of actual fraud going on (very rare), you don’t have a leg to stand on. You lost your money fair and square.

What To Do

So we know not to yell at a founder or disparage them. Here’s what we can do instead…

First off, thank the founder for how hard he worked. Never forget, he’s losing a lot more than you are.

He’s losing his dream and his livelihood. You’re losing a small amount of money.

Just recently, I had a founder call me and tell me his company was shutting down. I made sure to thank him for his hard work. After all, he probably sacrificed in ways I’ll never know.

If the founder is in your area, take them out to coffee or lunch and let them vent! Sometimes, all a person needs is someone to listen.

Those moments with a founder who just got kicked in the face, they’re very special. There’s something about being around a guy who tried everything and failed, but fought the good fight.

There’s one more thing you should do when a founder fails: keep in touch with them. You might want to invest in their next company!

Some of the best investments of all time have been repeat founders.

Wrap-Up

I expect 80% of my seed and pre-seed deals to go to 0.

All I want to see from a founder is that he tries his best and keeps me updated. Beyond that, whatever happens, happens.

Reputation is everything in investing. If your reputation is good, good deals come to you. If it’s not, they don’t.

Give yourself a good reputation by being classy when a company fails. It’s what’s best for your business, and it’s also the right thing to do as a human being.

More on tech:

Lessons From My 3 Most Challenged Investments

Why It’s Easier to Raise $3 Million Than $300,000

Small Investors Lead to Big Investors

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