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You never burn a relationship until you are sure you will not need that relationship.

A VC who backs out of a signed term sheet without a good reason is behaving badly. You can hurt his reputation and maybe make it harder for him to get into hot deals later.

But he (and others) will know who is spreading this story and the cost to you may be significant. For example, even if he is out of your current round, he might be back in your next round.

At the same time, you should never forget and to forgive should not be your policy.

If your next round is hot and oversubscribed and he wants in well, sorry. No room. Someone had to get kicked and he is at the top of your list of people to kick.

If you have an exit one day and you want to put some of your new riches to work, find another fund manager and then tell people why you did not pick the VC who long ago backed out of a signed term sheet.

Remember – revenge is a dish best served cold.

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