Assuming the VCs as a group do not control the board or the shares of the company (in which case, they can, generally speaking, taking over control of the company, bring in their own CEO, etc.), then …
the meanest thing they can do is Not Support The Company.
This can be a big deal. Or not. Depending on the scenario.
First, If you need to raise more venture capital, and aren’t doing incredibly well, a VC not being supportive can be a total gating item to getting further funding. If your prior investors aren’t 100% positive, or at least, 90% positive on the investment … usually … the Next Round guys simply won’t invest. You can game it. You can try to get investors that won’t do reference checks with earlier investors, for a number of reasons (FOMO, nonstandard investors, etc.). But you’re in a tough spot for future fundraising if your prior round investors are actively or even passively, negatively un-supportive.
You’re even in a tough spot for fundraising if they are quietly, passively-aggressively not supportive. This is more common.
And forget about most debt financing if your VCs aren’t 100% supportive.
There’s also a super quiet way to do this. Which is not to do your pro-rata. A big fund saying they aren’t going to do pro rata, best case, will raise material concerns in any pre-unicorn round. No one will care about small funds not doing pro rata, however.
Second, it can be a real issue in M&A, when you sell the company. Usually, no matter what the legal documents say, each VC gets a veto. They may get a veto under Delaware or California law. And the acquirer will generally require close to 100% shareholder support to close a deal no matter what the financing documents or law say.
You don’t always need the support of all investors to do an acqui-hire. But a real acquisition, to buy the company —you need everyone’s support. At least, almost always, most usually.
Third, if they don’t believe in you, and they have a strong brand — it can become almost an “anti-brand” for you. If you are funded by a Top VC, but … they don’t say positive things about you. VPs won’t want to join. Press won’t want to write about you. Lots of small, negative things.
“The partner doesn’t even go to board meetings anymore [but they own 20%].” There are exceptions. But usually — that’s a small, but clear signal, they think it’s a Total Dog. Or at least. Will never be big, ever.
These issues are usually >easy< to avoid. The key isn’t always crushing it. No one expects that.
The first key is transparency, and early heads-ups. Get monthly updates out on time, every month. Have organized board meetings with real time, updated projections. If you are behind, having a tough quarter. Don’t hide it. Don’t excuse it. Explain it.
In fact, explain it before it happens.
Investors have seen it all. What we really don’t want to see is something negative we aren’t braced for.
The second key is not to ask for more money, and not expect it. If you are struggling, and ask for more money, you may get it. If you are still struggling, and ask again, many VCs will want to fire you. Struggle, but just ask for help and not money — and you’ll be much more aligned.