A lot of VCs say they invest in the team. Then why do they often insert outsiders after they fund a startup?

My guess is most of the time the VCs are nervous about the business or don't get along with the people they're replacing. They want to install blindly loyal and controllable "yes men" to feel secure.

Bringing in suits is still considered standard operating procedure. It's a shame how many mini-John Scully incidents (minus the happy ending) occur. ArsDigita is a famous example, and I imagine there have been hundreds of less dramatic and less public instances.

It does seem like there would be legitimate scenarios where replacing top people may be necessary. Most of the time I would regard it as a likely-fatal symptom of a serious condition.

It all boils down to this: when a VC invests money in a startup, they are putting their reputation on the line. So imposing some control over the startup just seems natural. Imagine if you had to trust $11 million on a group of strangers; installing one of their own on the startup's board gives them a birds eye view of how their money is being spent.

Maybe the outsiders can add value to what your team lacks.

Because you rarely have a full team.