It breaks when you do a down round. (A for 50mln, exit for 10)
Just like real life.
Show HN: Startup funding simulator
151–160 of 168 posts
Re: Show HN: Startup funding simulator
#152Earlier quoted context omitted.
Not quite, anything subtracted from itself is zero. However, if you send me Infinity bitcoin, I will send you 10 Infinity bitcoin back (I am Expert Hacker).
No, not all infinites are the same. For example uncountable infinites are all larger than countable ones.
Bah, you could never convince me aleph numbers are real!
Re: Show HN: Startup funding simulator
#153This is nothing sort of amazing. Great f*cking work.
No exaggeration - this almost brought tears to me...
Re: Show HN: Startup funding simulator
#154Earlier quoted context omitted.
Agreed. Adding the employee point of view would make this tool an excellent education piece. It’s always a struggle to explain.
Or, no snark, open their eyes to how little their options are worth.
It's confusing as hell.
I know what options are. I trade options on the public market frequently and make some beer money.
But when it comes to my stock options in the private startup I work at, I'm lost, mainly because the share price is shown as one of two numbers: Fair Market Value, and Issue Price.
Let's say I joined after a funding round where the company earned a $5B valuation. I'm given the option to buy 10,000 shares at $4/share, which is the "Fair Market Value" price. But the investors paid $16/share. How much are my shares actually worth? $4 or $16? I THINK the answer is actually "neither", since my shares have no liquidity without using a private equity trading firm like Forge. But is the $5B valuation determined from the FMV or the issue price?
But ignoring that, let's say we IPO with a $25B valuation. Ignoring dilution, if my shares were worth $4 before, they're now worth $20/share, and I've profited $160K. But if my shares were actually worth $16, they're now worth $80, for a profit of $800,000.
Which is it really?
Re: Show HN: Startup funding simulator
#155Earlier quoted context omitted.
I don’t know that it’s really that rare. I look around and I see people with the fiscal responsibility, knowledge and ability to get things done in every quarter.
Depends on your circle. Most of my peers have families and mortgages, and don't have inherited wealth or sufficient savings. They are fiscally responsible but bootstrapping a company requires more resources than just being sensible with your money.
Absolutely right. My point is just that it isn’t that people couldn’t, but that they can’t. The former meaning that people generally do have the needed skills, the latter meaning they don’t have the opportunity.
Re: Show HN: Startup funding simulator
#156Earlier quoted context omitted.
Not really pedantic to me. Am I the only one here old enough to remember "Drug Wars" on the Ti calculators? That was an actual sim game. This is not that.
Pedantry can be perfectly accurate and still be pedantry.
It usually is.
But oh man it's lovely when someone is pedantic and wrong.
Re: Show HN: Startup funding simulator
#157Earlier quoted context omitted.
Pedantry can be perfectly accurate and still be pedantry.
It usually is. But oh man it's lovely when someone is pedantic and wrong .
Yes but 'it's a not a simulation' is both right and pedantic (it's not of material importance to the thing being showhn) and 'that's not actually pedantic' is, to my lights, pedantic and wrong! So by my (possibly pedantic) interpretation, I get the satisfaction of both.
Re: Show HN: Startup funding simulator
#158Re: Show HN: Startup funding simulator
#159Earlier quoted context omitted.
The complications are intentional. It doesn't need to be this way, but the job of a VC is to screw workers out of as much money as possible, as quickly as possible. Complex deals are one tool in the toolbox.
This was certainly true in the past from my understanding of the history before my time. Most terms are pretty standard now. And most of them have good reasons for existing — usually to align the founders and investors. Just because a term is complex and could benefit the investor doesn’t mean it’s meant to mislead. But, I’m interested in some examples that might shake my opinion about up!
I wouldn't say the complications themselves are intentional. But take a look at a typical Series A. There are 5 core documents. Dozens and dozens of pages of legalese. I'm a lawyer and understand them. But most founders don't.
What's interesting is that virtually every word in those docs is there to protect the investors, most at the expense of the founders and other existing shareholders.
Ok, so maybe that sounds obvious. Why would it be otherwise?
Well, take a look at the initial docs when a company is founded. The "market" is for those docs to be as simple as humanly possible. A certificate of incorporation is a page or so. No protections at all for the founders in there, most often.
But when you bring in investors, the market is to lard up that same document with investor protections and no protections for founders.
That's how founders get screwed. It's not that the complications are there to screw founders. It's that the standard forms are built with one party's interests in mind.
Re: Show HN: Startup funding simulator
#160Earlier quoted context omitted.
I'd seek out the founder of a company that did this and succeeded. Most don't!
Thanks, appreciate it!
In a nutshell: it's war from day #1, the only advantages you have is that you are more nimble and have less burn so changes in conditions will work to the detriment of your opponent. But they likely have more capital and a solid revenue stream as well as more mindshare with their customers.
If you ever plan on going head to head with an incumbent I'd take a leaf out of the playbook of the flea, find a single customer somewhere that you are going to make totally happy whilst conserving those two advantages, keep your burn down and focus on the speed of your turnaround in the interaction with the customer. Then, when your customer runs out of ideas for you to add to the package generalize as much of it as possible and pull in customer #2. Never retire a feature that you built for someone else but do focus on the emerging 'core platform' of features, the overlap between your customers and move peripheral stuff into its own environment (in software: a separate repo with customer specific stuff).
With a more physical product it's going to be harder (but then, everything is harder with a physical product) so you'll need to either go slower or have deeper pockets.