Stop the spray and pray and why VC investors need real training

*This article is adapted from * Tech in Asia

Venture capital often prioritizes rapid deals and perfect spreadsheets, but group president and CEO of  Vertex Holdings, Kee Lock Chua, argues this approach miscalculates risk. He insists the foundation of a successful investment lies in human behavior rather than financial models.

Accurately assessing a founder’s character requires a level of patience many modern investors lack, and moving slowly to evaluate resilience ultimately prevents disastrous financial mistakes.

Rethinking how to judge founders

Analyzing market data is straightforward, yet judging the people building the company carries the actual financial risk. Investors must therefore look beyond the numbers to assess character.

Chua considers this the hardest part of the job. “Understanding the person’s ability, what motivates the person, and what is the person’s attitude towards investors, and their attitude towards failure” is essential, he notes.

While anyone can build a financial model projecting future profits, these numbers provide a false sense of security for inexperienced investors.

The real work involves predicting how a human being will react when those early projections fail. It requires hours of conversation outside of a formal boardroom setting.

Dealing with stubborn founders and problems
Founders who ignore new information become liabilities under pressure. Because a standard pitch meeting masks these behavioral flaws, investors need to observe how leaders react when things go wrong.

A major warning sign is a founder whose mind is already made up.

“They think that the world is flat, and no matter what you tell them, they believe the world is flat,” he warns.

A startup rarely succeeds with its original business plan, meaning survival requires adjusting the product based on customer behavior. If a leader lacks the mental flexibility to accept harsh market feedback, the company will quickly run out of money.

Therefore, investors must look for leaders who combine confidence with the humility to admit when their initial assumptions are incorrect.

The cost of rushed deals

Identifying this necessary mix of confidence and humility takes time. Rushing to close deals with minimal dialogue leads to poor investments, while making deliberate decisions helps firms build stronger relationships.

Chua points out that in hot markets, investors might meet a founder at at 9 a.m. and wire money by 2 p.m.

“We never do that because we need to spend enough time,” he explains.

To illustrate this, comparing a business partnership to a marriage, he adds, “You cannot just decide by five minutes of conversation.”

Challenging your own choices
“The worst investor is one who has already decided to invest or not invest, and then finds a reason to justify the conclusion,” Chua says.

This confirmation bias often happens when an investor falls in love with a specific technology and ignores obvious warning signs. To fight this mental trap, investment committees must institutionalize disagreement.

Someone must be assigned to actively argue against the deal. Finding reasons to kill a project before signing the check forces the team to confront uncomfortable truths.

Setting rules for giving advice

Managing the resulting partnership requires strict boundaries once a check is signed. Balancing an investor’s guidance with a founder’s need for control creates friction, but establishing clear rules of engagement makes these conversations productive.

Chua believes two concepts are important for a good partnership:

• Humility means knowing that no one has all the answers when building something new.
• Autonomy means the founder always makes the final operational decisions.

He emphasizes that the founder is the one running the company every day. “It’s important for the founder to figure out which part is correct,” Chua says.

Meanwhile, investors sit in board meetings for a few hours a month and avoid the daily operational chaos. A healthy dynamic allows the founder to listen to the advice, weigh the options, and steer the company.

The need for real training

Navigating these complex founder dynamics requires dedicated expertise, as treating venture capital as a numbers game built on random bets causes financial loss. The profession demands rigorous training similar to that of a fighter pilot because a single mistake carries a high price.

Chua notes that training a pilot is an extensive process because a crashed plane costs US$50 million. “You cannot make that mistake,” he continues, drawing a direct comparison to the impact of losing US$10 million on a failed startup.

Building good instincts
Junior investors cannot simply be handed a checkbook and told to guess. They must complete a strict apprenticeship program.

These associates must sit in on hundreds of pitch meetings alongside veteran partners to learn which questions expose a flawed business plan. Handing capital to untrained individuals destroys the firm’s reputation and wipes out the money provided by external backers.

Through this exposure, investing becomes an exercise in recognizing patterns. True expertise comes from watching hundreds of companies succeed and fail over decades.

This accumulated observation builds a mental database for the investor. When an experienced investor meets a new founder, they compare the business plan against this database.

Chua argues firmly against the strategy of making random bets across the market. “[Everybody] now finally understands that this kind of spray and pray never works,” he concludes.

The other side:

• While Chua cautions that rushing investments after brief conversations can lead to poor outcomes, recent 2025 venture data points to a different reality in competitive sectors like AI. Top-tier funds are increasingly relying on “pre-emptive rounds,” intentionally bypassing weeks of traditional diligence to secure deals in a matter of hours to avoid missing out on high-potential startups.
• This rapid pace of deal-making also influences how portfolios are built, offering an alternative to Chua’s belief that broad “spray and pray” investing is ineffective. The 2025 Dealroom Power Law Investor Ranking highlights that venture returns are heavily driven by extreme power-law dynamics. As a result, casting a wider net through broad indexing strategies has proven to be a mathematically sound way to capture unpredictable, outlier successes that traditional evaluation methods might overlook.
• Beyond how capital is deployed, the traditional hands-off dynamic between founders and investors is also shifting. While Chua advocates for complete founder autonomy with investors acting purely as advisors, 2025 data from the Global Startup Studio Network (GSSN) shows that a more involved approach can yield strong results. “Venture Studios” where investment firms act as highly operational co-founders, are currently seeing a 30% higher success rate and a faster path to Series A.

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