When Money Gets Cheap: How a Founder Should Judge VCs

When the price of money falls, how should a founder choose a VC?

— August 2026: venture capital re-examined as money, people, organization, and brand

In the 2026 venture market, at least in aggregate, money is not scarce.

Global startup investment in the first half of 2026 was tallied at roughly $510 billion, a record for any half-year — already exceeding the roughly $440 billion invested in all of 2025.

In Q1 2026 alone, about $300 billion went into startups worldwide, of which about $242 billion — 80% — went to AI companies.

But this money is not spreading widely; it is concentrating extremely into a handful of companies.

OpenAI and Anthropic alone raised about $217 billion in the first half of 2026 — 43% of all global startup investment.

In Q1 2026, four companies — OpenAI, Anthropic, xAI, and Waymo — raised about $188 billion, roughly 65% of global venture investment.

Crunchbase's tally that about 60% of global startup investment in 2026 has gone into mega-rounds of $1 billion or more shows the same concentration.

Meanwhile, new VC funds tracked by Carta in Q1 2026 had deployed only about 28% of the capital they raised, holding about 72% as dry powder.

So describing the 2026 venture market simply as “there is no money” fails to explain the current volume and concentration of capital.

What is actually appearing is closer to a market where capital is enormous, but the number of companies judged able to absorb it at very large scale is limited.

In this situation, the founder's question of choosing an investor becomes as important as the investor's question of choosing a founder.

1. Why should a founder take VC money now at all?

Traditionally, capital was the key factor of production for early technology companies, enabling product development and organizational expansion.

That VCs can add value beyond supplying cash — through contract structures, monitoring, advice, and support — has long been confirmed in the venture capital literature.

But at least in AI application software, the cost structure of building a product is changing fast.

Analyzing the 2026 AI application market, a16z judged that the cost of generating code has already fallen sharply, and that this change is not yet fully reflected in how companies are formed or in the shapes of software that will exist.

Sequoia projected in 2026 that AI companies may grow beyond selling software tools to existing service firms — toward models that perform the service work itself with software and AI.

In Sequoia's accounting example, companies were shown to spend far more on actual accounting services than on accounting software, and the possibility was raised of AI companies selling the work itself rather than the tool.

The more this outlook materializes, the more some application-software companies may handle wider domains of work with fewer people and less initial capital than before.

This proposition cannot be applied as-is to industries requiring massive physical or computational capital — semiconductors, data centers, robotics, bio, frontier AI models.

Indeed, about $47.4 billion of venture funding went into Physical AI alone in the first half of 2026, nearly four times the previous half.

So the claim that “the price of money is falling” here does not mean capital has become unnecessary in every industry — it is the hypothesis that, particularly in capital-efficient AI and software startups, mere cash supply is becoming harder to count as a VC's differentiation.

2. VCs that give money, and VCs that give more than money

That the economic function of VCs is not limited to supplying cash has long been confirmed empirically.

In a study surveying 885 institutional venture investors across 681 VC firms, the post-investment support VCs reported providing included strategic advice, introductions to other investors, customer introductions, operational advice, board construction, and hiring.

In that survey, 87% of VCs said they provide strategic advice, 72% introductions to other investors, 69% customer introductions, and 65% operational advice.

So what a founder buys from a VC is, even economically, hard to see as a single commodity called cash.

VC capital can bundle cash + information + networks + hiring + customer access + follow-on capital + governance.

Nor do all VCs provide this non-monetary value equally.

A 2026 NBER study analyzing about 750,000 US startups and 329 accelerators reported that value-added varied enormously by accelerator: most programs added less value than non-participation, while a small right-tail of programs produced large long-term outcomes.

In other words, the proposition that “any accelerator or famous VC on board is automatically good” is not supported by the data either.

A founder must decide not merely whether to take capital, but which capital to take, and from whom.

3. Every 100 million won is identical in accounting, but not in strategy

There is also research showing an investor's reputation can convert into real economic value.

In David Hsu's study comparing early funding offers received by the same startups from multiple VCs, offers from high-reputation VCs were about three times more likely to be accepted by founders.

In the same study, high-reputation VCs acquired startup equity at roughly 10–14% lower prices than other VCs — consistent with founders paying an economic cost for the non-monetary value those VCs provide.

Classic research on VC certification effects likewise reported that IPOs with VC participation can show lower information asymmetry and issuance costs.

A study of technology firms on Korea's KOSDAQ also found VC participation served as certification against R&D uncertainty, with the effect stronger for higher-reputation VCs.

So the claim that “100 million won from a famous VC and 100 million won from just any investor may not be strategically identical” is at least consistent with the research on VC certification and reputation premiums.

A good VC's brand can act as an additional signal of the company's quality to customers, talent, and follow-on investors.

Which means that even in an environment where money itself grows less scarce, the scarcity of well-reputed capital can exist separately.

4. Then when evaluating an investor, look at the person

VCs themselves weigh founders and teams heavily in their investment decisions.

In the study of 885 VCs, investors rated the management team as a more important selection factor than business characteristics like product or technology, and attributed investment success and failure more to the team than to the business.

A 2025 NBER study analyzing more than 8,000 actual early-stage VC deal flows likewise found team, market, product, and exit potential used in evaluation — with team assessment playing a particularly large role in explaining who got early funding.

Then the founder, too, has reason to look past the VC organization's name to the actual experience of the person who will judge their company.

Here I set up a hypothesis.

Humans carry a status quo bias — a tendency to preserve the current state; Samuelson and Zeckhauser's research confirmed that in experiments and real decisions, people disproportionately stick with existing choices.

Arkes and Blumer's research showed experimentally that once money, effort, and time have been invested, a sunk-cost effect can drive people to continue the behavior.

System justification theory likewise explains that people can be motivated, to varying degrees, to defend and justify existing social, economic, and political systems.

These studies do not directly prove the proposition that “exam passers are conservative.”

But they do provide theoretical reason to ask how someone who invested heavy time, effort, and identity in an existing institution — and was richly rewarded by it — responds when that institution changes.

So in evaluating a VC as well, one can build an analytical frame that looks at both “which existing game did this person win?” and “did they then leave that game and win again in a new game with no answer key?”

This is not an empirically established VC evaluation formula — it is an evaluative hypothesis derived from the psychology literature and from VC research on the importance of entrepreneurial experience.

5. What matters more than winning the old game is having won again in a new one

From this perspective, using academic credentials or professional licenses as evidence of conservatism is unfounded.

What matters instead is how strongly the past success path constrains present judgment.

Someone who passed through elite universities, the professions, IB, or consulting — and then founded a company, staking their own capital and career on a new market — holds both institutional success in the past and entrepreneurial experience in the present.

Conversely, the possibility that someone continuously promoted and approved within the same evaluation system will read a new industry through the old evaluation model is worth examining — but it must not be concluded from the résumé alone, without looking at the person's actual judgments.

So the formula I propose is not a scientific equation but a practical investor-evaluation heuristic:

“The size of victories won within the old institutions − the experience of discarding the old success formula and winning again in games with no answer key = the latent risk of fixation against a new order.”

The purpose of this heuristic is not to exclude elites, but to find the people capable of abandoning their past success.

6. VC is not one species

Compare actual VC organizations and you find quite different creatures under the same name “venture capital.”

Primer, begun in 2010, is Korea's first startup accelerator, and officially states its three values as management over money, sincerity over talent, principles over experience.

Primer defines itself not as a mere investment firm but as an education company, running six months of management education, follow-on investment support, and demo days for selected startups.

As of 2026, Primer's acting partners include Kwon Do-kyun, who ran Inicis and Initech, and people with experience in Karrot's global and business teams, DelightRoom operations, Karrot's local business, and as startup CEOs.

So there are grounds to classify Primer's publicly known investment organization today as one strongly mixed with founding and operating experience, rather than one composed of traditional finance careers alone.

Bon Angels likewise officially emphasizes support from founder-turned partners, and states it has invested in about 270 startups since 2007.

Notably, 57% of the capital in its current 120-billion-won Pacemaker Fund 4 came from founders of Bon Angels' own portfolio companies — the structure of funded founders becoming LPs for the next founders, reflected in the actual capital structure.

Kakao Ventures, as of 2026, discloses more than 280 family companies, over 430 billion won in AUM, and more than 11 cumulative funds.

In its official investment philosophy, Kakao Ventures says it focuses on the one reason a startup could succeed rather than the many reasons it might fail, defining itself as the founder's first officer or copilot.

In 2026 Kakao Ventures reorganized its official core values, publishing ethics, professionalism, one-team, and sincerity as decision principles.

IMM Investment, by contrast, is an Asian alternative-investment platform managing about $7.7 billion in AUM as of March 2026, investing across VC, growth equity, infrastructure, real estate, and fund of funds.

IMM states that more than 70 investment professionals collaborate across an organization spanning Seoul, Tokyo, Hong Kong, and Singapore.

The published careers of IMM's key people include finance and professional-services backgrounds such as securities firms and Ernst & Young.

These differences do not mean one organization is superior — they mean each VC carries a different decision-making history and different organizational constraints.

7. In the end, look at the organization more than the individual

A VC's investment decision is not produced by one person's intuition alone.

VC research shows the investment process connects deal sourcing, screening, valuation, contract structuring, post-investment monitoring, LP relations, and internal organizational structure.

VC contracts, moreover, can contain liquidation preferences, vesting, anti-dilution, and board rights — structures that define the long-term relationship between founder and investor.

So however unorthodox an individual investor may be, they can never be entirely free of their fund's mandate, investment committee, contract terms, and obligations to LPs.

For this reason, a founder evaluating a VC must separate two questions: “does this person understand the new game?” and “is this person actually in a structure that lets them bet money on it?”

8. Why Altos is interesting

Altos Ventures officially describes its investment philosophy along four axes: Founder Oriented, Fundamentals Focused, Uncommonly Patient, Contrarian by Nature.

Altos states that it does not chase fashionable industries but evaluates each team, company, and market independently from first principles, avoids areas where capital has over-concentrated, and prefers companies with their own way of solving problems.

It also states explicitly that it can deploy substantial additional capital into high-performing companies more than a decade after the initial investment.

So judging an investor's receptivity to new games from their degrees or former employers risks misclassifying organizations like Altos, whose actual investing behavior and official philosophy can be unorthodox.

In the end, when reading an investor, it is rational to weight repeated actual bets and the long log of behavior more heavily than the résumé.

9. Why YC's equity sells even at a high price

As of 2026, Y Combinator's standard deal totals $500,000.

Of this, $125,000 converts into 7% of the company, and the remaining $375,000 is invested as an uncapped MFN SAFE.

So the economic stake YC ultimately acquires can exceed the fixed 7%, with the additional SAFE's percentage determined by the terms of the company's later raises.

Compare these terms as mere cash-for-equity and it is by no means cheap capital for the founder.

But the existing empirical finding — that founders with access to high-reputation VCs tend to accept even unfavorable pricing — explains how the economic value of a brand as strong as YC's can exist outside the cash.

Giving equity to an organization with a powerful investment brand, in other words, is best read not as simple fundraising but as a transaction that purchases brand, certification, and network together.

10. a16z sells not money but an operating system

a16z officially states that it manages more than $100 billion in assets as of 2026.

At the same time, a16z describes as its core differentiation a platform model — a large operator organization spanning marketing, talent, legal, and policy that supports founders.

a16z states that its investment team, too, is built around former founders and operators of successful companies.

So evaluating the product of a large VC like a16z by the size of the check alone omits much of the non-monetary resources the organization claims to provide.

As such VCs grow, the center of competition may shift from who holds more money to who has built the stronger operating system around the money.

11. So I read a VC as five resources

The first is money — and before the amount, the founder must judge whether they actually need that capital at all.

If permanent equity is handed over to receive cash that was not needed, the founder must weigh the benefit of the raise against the long-term cost of dilution.

The second is information — whether the VC can provide information about the industry, competitors, customers, and follow-on capital that the founder could not readily obtain alone.

The third is time — how much actual partner time goes into strategy, operations, hiring, and customer introductions after the investment can determine the VC's added value.

The fourth is brand — empirical research has confirmed that a reputable VC's name can operate in outside markets as a certification signal of the company's quality.

The fifth is behavior when losses arrive — because information asymmetry and conflicts of interest exist in the VC-founder relationship, contracts, monitoring, and governance play crucial roles.

So this essay's judgment is that a VC's true relational value reveals itself less in the kindness offered when everything goes well than in how its contractual rights and actual behavior are used when the company shakes.

12. Primer, Altos, YC, and IMM are not the same product

Primer centers on an accelerator structure: selecting founders at the earliest stage and providing education, mentoring, and connections to follow-on investment.

Altos aims to be a founder-oriented VC able to supply capital long after the initial investment.

YC operates a structure combining standardized early investment with acceleration.

a16z is closer to a multi-stage venture platform combining enormous AUM with a separate operational-support platform.

IMM is a large multi-asset alternative-investment institution running not only VC but growth investment, infrastructure, real estate, and fund of funds.

So lining them up on one number and asking “who is the best VC” commits the error of comparing different products by the same standard.

The better question is: “what resource does our company lack right now, and which investor holds that resource most scarcely?”

13. A good founder does due diligence on the VC too

VCs doing due diligence on founders is the normal functioning of capital markets.

Real VCs evaluate team, market, product, valuation, and deal structure before investing, and perform monitoring and support afterward.

But an investment contract is simultaneously a contract binding the founder into a long-term economic and governance relationship with a particular investor.

So the founder, too, has economic reason to examine an investor's history, organization, LP structure, investment philosophy, reputation, past portfolio, and behavior in crises.

Especially for a company where rising capital efficiency means outside investment is no longer a survival requirement, the very option of refusing an investor can become part of its bargaining power.

If a VC can review a hundred startups and choose one, it is just as rational for a good founder to choose, among many kinds of capital, the capital that fits their company.

14. The more common capital becomes, the more expensive people become

The record venture investment of the first half of 2026 shows not a market where capital is disappearing, but one where enormous capital concentrates into a tiny number of companies.

At the same time, AI is rapidly changing the cost of building application software and the way companies perform work.

If these two changes proceed together, the scarcity value of mere cash may fall below its past level for some founders.

But the certification effect of reputable investors, and non-monetary resources like networks, operational support, and judgment, can still carry economic value.

Indeed, the research showing founders accept economically more expensive terms to take money from reputable VCs demonstrates that value outside the money can be reflected in actual transaction prices.

So the coming competition may move less between VCs with money and VCs without it, and more toward which VC can give something besides money.

And if capital-efficient good founders multiply, founders may come to select VCs as forcefully as VCs have selected founders.

This is not an argument for disrespecting investors.

On the contrary — precisely because they are counterparties exchanging the scarce asset called equity, it is an argument for evaluating investors more seriously.

The classic question used to be: “is this founder worth my money?”

In 2026, the question can come from the other side as well:

“Is this investor worth my company's equity?”

Money can be raised again, but equity once issued — and a shareholder relationship formed over years — shapes the company's future governance and economic rights.

So the conclusion of this essay is that the more common money becomes, the higher the bar for choosing a good investor should rise.

Money alone is less and less enough.

Good capital must ultimately come attached to good people, good judgment, good networks, and a good brand.