VCs Are Arms Dealers 

By Samson Williams, Anthropologist-in-Residence, MilkyWayEconomy 

Venture capitalists (VCs) are like arms dealers, plain and simple. They’ll sell you weapons, sure—but don’t forget they’re selling them to your competition too. They’re not your allies, not your friends. They’re opportunists in the business of backing whoever pays and shows potential, with zero allegiance to you or your vision. Your VC sees you as one bullet in a 1000 round magazine, fired off into a market they hope will explode with cash. Their loyalty lies only with the bottom line. If you understand that, you can play the game. If you don’t, you’ll end up as another cautionary tale of misplaced trust.

The VC Reality: Money Over Mission

Let’s not sugarcoat this: VCs aren’t funding your dreams out of the goodness of their hearts. They’re not inspired by your TED Talk or your commitment to “disrupting an industry.” They’re funding your business because they see a potential payday. Like arms dealers in the midst of a conflict, their strategy is to supply as many sides as possible to maximize their chances of profiting from the fallout. If your startup implodes, they’ll chalk it up as a loss, shrug their shoulders, and move to lose LPs money on the next roll of the dice. But if one of their portfolio companies emerges as a dominant player, they’ll cash out with a smile on their face and zero concern for the collateral damage left behind.

This isn’t a moral failing on their part. It’s simply how the system is structured. VCs are judged by the returns they deliver to their limited partners (LPs)—not by how many founders they helped realize their dreams. To them, you’re not a person with a vision; you’re an investment opportunity.

Collateral Damage in the Startup Arms Race

When VCs fund both you and your competition, they’re essentially fueling a war. You’re burning capital, grinding your team to exhaustion, and making countless sacrifices to secure market share, while your competition does the exact same thing—often with the same VC cheering from the sidelines. The result? A high-stakes arms race that benefits no one except the investors.

Imagine pouring everything into a battle for talent, customers, and market dominance, only to realize the person who gave you your war chest also supplied the arsenal for the other side. What happens when this fierce competition drives prices down, inflates customer acquisition costs, and leaves both you and your rival struggling to survive? The VC walks away unscathed, with stakes in both companies. If one succeeds, they win. If both fail, they write it off and move on to the next batch of startups.

Meanwhile, founders are left to pick up the pieces, often losing their original vision, burning through their mental reserves and emotional capital, and watching their teams suffer under the pressure. It’s the founders—and their employees—who are on the battlefield. The VCs? They’re watching from the carnage from the beach, calculating odds of returns, sipping margaritas, while eyeing the next deal. 

No Flags, Just Profits

Arms dealers don’t wave flags—they count cash. Likewise, VCs aren’t rallying behind your company’s banner. They aren’t inspired by your mission to change the world. What they care about is whether you can deliver a 1000x return. If you stumble or get crushed by your better-funded rival, they won’t lose sleep over it. History has shown, they’ll just double down on the winner and call it a day.

This lack of allegiance is also why VCs sometimes push startups into aggressive growth strategies that don’t align with the founder’s long-term vision. Growth at all costs is their mantra because it increases the likelihood of a lucrative exit—whether through acquisition, IPO, or a merger with your competitor. The pressure to scale quickly, expand markets, and take risks often results in founders compromising their principles or burning out entirely. But for the VC, these risks are just part of the game. They’re not on the line. You are.

Founders as Pawns

When you take VC money, you’re not just a founder—you’re a soldier in their war. The funding, the introductions, and the resources come with strings attached. You’ll be expected to fight tooth and nail, not only for survival but for dominance, even if it means sacrificing your health, your team’s well-being, or your original vision.

VCs position themselves as allies, mentors, and partners, but their true goal is to ensure a return on investment. And that often comes at the expense of your business. They’ll encourage you to take risks, push for unsustainable growth, and pivot to chase the latest trends, all while knowing that if you fail, you’re replaceable. There’s always another founder with another bright idea desperate for just enough cash to make risking their soul seem like a good role of the dice. 

This dynamic often pits founders against each other, creating a toxic cycle of competition where innovation takes a backseat to survival. The result? A market littered with half-baked products, disillusioned teams, and burnt-out founders—all casualties of the VC-driven arms race.

The Playbook for Survival

1. If A Snake Rattles Believe It's Speaking The Truth, aka Know What You’re Getting Into: VCs aren’t villains, but they’re not saviors either. They’re businesspeople playing a high-stakes game, and you’re a piece on their board. Understand their motives and operate accordingly.
2. Pick Your Partners Wisely: Not all VCs are created equal. And not all money is good money. Some genuinely align with your mission and are selective about their portfolio. Others will fund anything that looks like it could generate a return. Do your homework.
3. Negotiate Terms That Protect You: Push for provisions in your funding agreements that limit your VC’s ability to invest in direct competitors. If they balk, that’s a red flag.
4. Diversify Your Funding Sources: The less reliant you are on VC money, the more control you’ll have over your company’s future. Bootstrapping, angel investors, crowdfunding and revenue-based financing are all viable alternatives.
5. Focus on Sustainability: Build a business that can stand on its own, even if it means slower growth. Long-term success is worth more than a short-lived sprint to the top.

The Bottom Line

VCs are not your enemies, but they’re certainly not your allies. They’re like the arms dealers of the startup world: selling tools to everyone, making profits no matter who wins, and never stepping foot on the battlefield themselves. Founders who fail to understand this dynamic often pay the price, losing not just their businesses but their peace of mind and sense of purpose.

If you’re going to take their money, fine. But do it with your eyes wide open and a strategy to protect your vision and your team. This isn’t about playing nice; it’s about surviving, thriving, and staying true to what you set out to build.