Unity SCM’s Founder on When to Return VC Money: A Lesson in Long-term Thinking

Unity SCM’s Founder on When to Return VC Money: A Lesson in Long-term Thinking

Returning venture capital might sound like startup suicide. But in a recent episode of Category Visionaries, Unity SCM founder Amir Taichman shared how giving back investor money a week after raising it became one of his smartest strategic decisions.

The Road to a Difficult Decision

Before founding Unity SCM, Amir and his co-founder were working on solving a critical problem in database version control. As he explains, “We went on this crazy two year ride of building a technology that didn’t exist and to a large degree, still doesn’t exist. And we actually built a working product that created the version and control for databases, data and all.”

The technology was impressive. Developers were excited. They even secured funding through Upwest, an accelerator that helps Israeli founders enter the US market. But something wasn’t sitting right.

The Moment of Truth

“When you’re fundraising, you’re selling, right?” Amir explains. “You’re selling the vision, you’re selling the plan, you’re selling the long term plan, you’re selling the team, you’re selling everything, and you have to be fully convinced and fully in there to be able to do that.”

Despite successfully raising a seed round, the founders reached a sobering conclusion about their business model. “We couldn’t figure out how to make the business side of it work,” Amir recalls. The deeper issue wasn’t technology – it was timing. “This is 2011, 2012, right? DevOps as a concept doesn’t even exist yet and no one’s willing to pay for developer tools.”

Making the Hard Call

Rather than pushing forward with investor money, they made an unprecedented decision. “We actually went out and we raised a seed round and we ended up giving all the money back to the investors like a week after we did it,” Amir shares.

The decision wasn’t easy. As Amir notes with a touch of humor, “It turns out giving money back to investors is much harder than getting them to give you money in the first place.”

The Long-term Impact

What seemed like a potential career-ending move actually strengthened relationships with their investors. “Making that move, which is completely untruthial at that point, built this really long term relationship with the upwest team and they ended up co-leading the funding rounds for the current company that we’re running for Unity SCM,” Amir explains. “So it’s like doing the right thing kind of pays off in the long run.”

The Decision Framework

Amir’s framework for making this decision offers valuable insights for founders facing similar challenges. He explains that after two years of work, they had to ask themselves: “At some point you need to be 150% convinced that this is the right thing to do because you’re going to be spending the next five or seven or ten years doing this if you’re successful.”

When they couldn’t confidently answer yes, they made the hard choice: “We can’t in full conscious, like, take the money and go with it and keep going with it, not knowing how we’re going to go down this path.”

The Broader Lesson

Unity SCM’s story challenges conventional wisdom about startup perseverance. While determination matters, equally important is the courage to recognize when a current path isn’t viable – and the integrity to act on that recognition, even when it means making difficult decisions.

For founders, the key takeaway isn’t about when to return money, but rather about maintaining the highest standards of integrity in investor relationships. As Amir’s experience shows, demonstrating trustworthiness and good faith in difficult moments can build the foundation for future opportunities.

Looking back, Amir’s conviction is clear: “We don’t think we regretted it for one moment.” Sometimes, the bravest thing a founder can do is admit when something isn’t working and take decisive action – even if that action seems counter-intuitive to traditional startup wisdom.