I'm especially surprised that a VC would make such a comment because it's an industry where being nice for the sake of relationship can be highly unethical.

I think you need to read the rest of this thread, especially the portions noting how one often has to work with people long after any given decision to be nice or not.

But additionally you also assume that being nice somehow shortchanges your ability to advocate or make good decisions, which isn't the case.

Being nice does prevent you from making decisions to screw people over, and if that's what you're referring to then I'm glad VCs are not taking your advice on this.