Early-stage tech companies are fueled by different types of ambitions, and those who start them have motives that range from economic Darwinism to visions of celebrity. A complication in venture capital is the sussing out of founders (of would-be portfolio companies) which outcome is their primary fuel source. This is complicating because the goal of the venture investor is primarily to make money and she/he does not want any conflicting influence associated with an investment.
It is incorrect to assume that rational thought is the basis for all actions of a young company. It is easy to believe that we all pull out a calculator and determine what we do next based on the aim of highest economic payoff; however, as alluded to above, payoffs actually take different forms, some having very little to do with money (i.e. human ego).
So What Do We Do Next?
The intensity of an ego-driven fuel source makes it very difficult for founders to "see" with any clarity that things are not going well and that they are not just one good idea away from greatness. Sometimes the quest for "celebrity" is the very thing that makes it unattainable. My best advice to early-stage investors is to have a process for revealing your founder's fueling profile (before you wire out the money). Many times, you can find what that is based on the terms they are NOT willing to accept in the context of governance. There is always a theme to a founder's negotiating responses and there are no incidental comments (as someone pretty smart once said to me).