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There鈥檚 a constant balance of power between founders and investors. The recent influx of capital into venture has created massive competition among VCs to get in on the hottest deals. This is spiking valuations and resulting in massive funding rounds, even at the earliest stages. Currently, the negotiating power is entirely in the hands of founders.

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However, it wasn鈥檛 always so. Before massive liquidity hit the system and capital was more scarce, venture investors controlled the leverage in conversations with founders. This ever-shifting balance of power has created a revolving door of founders turned investors and vice versa. The smartest entrepreneurs are wise to go where the power is.

Many of today’s leading venture funds were started and are led by former founders. The legendary was built by the mafia. 鈥檚 Silicon Valley legacy is built on his role as a co-founder of . Likewise, most of the partners at came through the revolving founder door. The list goes on.

While on whether or not being a founder leads to smarter VC deals, there are some obvious perks to having been on both sides of the fence. The most obvious is the inherent perspective these investors have on what founders want and need. VCs who have experienced the negotiating dynamics from the founder side are better equipped to leverage those dynamics to achieve smarter deals and better relationships with founders.

There鈥檚 also an undeniable respect that founders have for investors who have walked a mile in their shoes.

Additionally, one of the most important parts of being a venture capitalist is being deeply connected to the startup founder scene. Having that 鈥渙ne of us鈥� street cred creates a genuine trust and respect in those circles that鈥檚 invaluable to gaining access to those communities.

Given the dynamics in the capital markets, many VCs are taking laps through the revolving door as well, leveraging their relationships and access to capital to launch new companies.

A couple of recent examples of this include , the investor turned founder of and , a Founders Fund general partner turned founder of . Both started as VCs, became founders, then went on to launch amazing companies.

Notable VC and partner at recently switched sides to start his software company, The Fin Exploration, while calling in a recent article in .

The rush of institutional, traditionally public-market chasing capital has entered the private side鈥攑utting the squeeze on the relatively expensive, high-risk high-reward VC dollar. This is extremely favorable to founders, as the cost of capital gets driven down massively while the demand for startup equity skyrockets to new highs. There鈥檚 no doubt why Lessin chose to jump from VC to founder.

Investors turned founders have found success within the early-series rounds, where funding is booming and more SaaS startups are nailing down funding from outside of Silicon Valley, driving up valuations.

What is actually happening doesn鈥檛 mean Lessin is wrong. You go where the money is, and global funding isn鈥檛 getting shy around software startups. There鈥檚 a clear argument to be made that it makes sense to follow that money into a massive exit in order to provide the liquidity to capitalize on the eventual rotation of power away from founders and back to VCs.

Accumulating capital from the system through high-valuation exits seems to match the optimum timing to deploy that capital when valuations eventually come back down to earth.

Given the current dynamics in the capital markets, it makes sense to see more VCs start companies, exit handsomely, then redeploy that capital at reasonable prices over the coming decades.

This career rotation makes enormous amounts of sense over the 40- to 50-year career time frame, and I suspect we鈥檒l see this revolving door growing in popularity as the current cycle continues to extend.

Matt Cohen, founder and managing partner at, was founding investor of, which was acquired by in 2017. He previously wrote about raising capital for 附近上门 News.

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