Why frontier lab employees should avoid angel investing: lower skin-in-the-game for VCs and founders

dbasch · x · 2026-08-25

Arguing against angel investments for frontier lab employees, the author points out a shift in incentives over the last twenty years.

Core Arguments:

Reduced Founder Risk: Being a startup CEO is now glamorous and well-paying compared to the past, meaning founders have much less "skin in the game".
Proliferation of VCs: The number of VC funds has increased roughly 7x, while the S&P 500 remains at 500 companies. VCs earn high salaries regardless of performance and are only accountable after 10 years.
Misaligned Incentives: Unlike S&P 500 CEOs who get fired for underperformance, the VC/entrepreneur ecosystem is less motivated to generate shareholder returns.

Conclusion: Don't invest in startups unless you want non-financial returns or possess unique information about the company or market.

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