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FounderPool: A community for founders to share risk and diversify their equity

founderpools.com

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Re: FounderPool: A community for founders to share risk and diversify their equity

#111

Post by charliemil4 »

maxk42 wrote: post #103

This is the worst idea I've ever heard. If I were a VC and I found out one of the founders in my portfolio had become involved with FounderPool I would immediately drop them and cut my losses. Being a founder takes a huge amount of confidence: You have to believe, against all odds, that you will be successful. If you really do believe you'll be successful then it wouldn't make sense to trade your soon-to-be valuable…

+100

And on top of all this, what happens to the voting of this pool, share holder agreements, etc? I can only fathom the shenanigans that can occur. An acquiring firm can press hard on this 1% if they're playing ball.

Re: FounderPool: A community for founders to share risk and diversify their equity

#112

Post by geoburke »

supernova87a wrote: post #105
aaisola wrote: post #4

How do you overcome the adverse selection problem? ie. only founders who know their startups are duds want to diversify their holdings?

This is a good point -- will the funding rounds also need to be qualified by only certain VCs being trusted to make good valuations? What "bar" of trustworthiness of VC will be honored?

While we go through a vetting process for all applicants, pools are ultimately formed through a peer-selection process based on ranking. The presence of top tier VC backers is one of several major factors a founder will rank with.

Re: FounderPool: A community for founders to share risk and diversify their equity

#113

Post by kazagistar »

maxk42 wrote: post #103

This is the worst idea I've ever heard. If I were a VC and I found out one of the founders in my portfolio had become involved with FounderPool I would immediately drop them and cut my losses. Being a founder takes a huge amount of confidence: You have to believe, against all odds, that you will be successful. If you really do believe you'll be successful then it wouldn't make sense to trade your soon-to-be valuable…

So diversification is only for the investors but never permitted for the founders? Financial security for me, but financial risk for thee? I guess I shouldn't be surprised, that's the financial system as a whole; people who have property moving risk onto people who do the actual work at every turn.

Re: FounderPool: A community for founders to share risk and diversify their equity

#114

Post by bynormous »

maxk42 wrote: post #103

This is the worst idea I've ever heard. If I were a VC and I found out one of the founders in my portfolio had become involved with FounderPool I would immediately drop them and cut my losses. Being a founder takes a huge amount of confidence: You have to believe, against all odds, that you will be successful. If you really do believe you'll be successful then it wouldn't make sense to trade your soon-to-be valuable…

If I was a founder and I found out a VC would hedge their bets by investing in other startups besides mine, I would drop them in an instant. A VC should guarantee they will put their full faith in only my startup. /s

Re: FounderPool: A community for founders to share risk and diversify their equity

#115

Post by jedberg »

maxk42 wrote: post #103

This is the worst idea I've ever heard. If I were a VC and I found out one of the founders in my portfolio had become involved with FounderPool I would immediately drop them and cut my losses. Being a founder takes a huge amount of confidence: You have to believe, against all odds, that you will be successful. If you really do believe you'll be successful then it wouldn't make sense to trade your soon-to-be valuable…

I don't see this as any different than a founder who is also an angel investor, which many successful startup founders are when they go for their second company. They even cross invest.

If you look at the YC founders who have exited and gone on to found a second company, many many of them are also investors in other YC companies, sometimes even from their own cohort, if they did YC again. It's pretty common.

Diversification is a smart move. In this case a founder with less capital is investing something they do have, equity in their own startup.

Re: FounderPool: A community for founders to share risk and diversify their equity

#116

Post by vladislav »

maxk42 wrote: post #103

This is the worst idea I've ever heard. If I were a VC and I found out one of the founders in my portfolio had become involved with FounderPool I would immediately drop them and cut my losses. Being a founder takes a huge amount of confidence: You have to believe, against all odds, that you will be successful. If you really do believe you'll be successful then it wouldn't make sense to trade your soon-to-be valuable…

Not advocating for the pool idea but that reasoning is generally incorrect. Decreasing personal capital/timing risk actually increases founder risk tolerance for bigger outcomes for their startup. Investors should want founders to be hungry for big capital, not small.

Re: FounderPool: A community for founders to share risk and diversify their equity

#117

Post by centimeter »

tonystubblebine wrote: post #79

As you get older without an exit, you start to freak out a bit about your retirement. At least that was true for me. I'm 1000x better as an entrepreneur at age 42 than I was at age 27. But I'm also 100x more worried about some basic financial things like whether I will be able to retire, maintaining a mortgage, keep up financially with my spouse's career and her changing life expectations. And what helped stabilize m…

> keep up financially with my spouse's career and her changing life expectations

This has been a big issue for multiple people in my social group. It's well known at this point that a relationship where a woman earns more is less stable - https://www.nytimes.com/2013/06/02/business/breadwinner-wive...

Whether this is due to sexist expectations, increased likelihood of hypergamous relationships in women, etc., is not very relevant; this is not good for men with high-variance occupations.

Re: FounderPool: A community for founders to share risk and diversify their equity

#118

Post by marcinzm »

vladislav wrote: post #116
maxk42 wrote: post #103

This is the worst idea I've ever heard. If I were a VC and I found out one of the founders in my portfolio had become involved with FounderPool I would immediately drop them and cut my losses. Being a founder takes a huge amount of confidence: You have to believe, against all odds, that you will be successful. If you really do believe you'll be successful then it wouldn't make sense to trade your soon-to-be valuable…

Not advocating for the pool idea but that reasoning is generally incorrect. Decreasing personal capital/timing risk actually increases founder risk tolerance for bigger outcomes for their startup. Investors should want founders to be hungry for big capital, not small.

Yup, all that excessive risk incentives founders to do is to take a guaranteed early exit rather than go for a big future payout. And a VC who wants that probably shouldn't be a VC as they lack the risk tolerance.

Re: FounderPool: A community for founders to share risk and diversify their equity

#119

Post by tonystubblebine »

centimeter wrote: post #117
tonystubblebine wrote: post #79

As you get older without an exit, you start to freak out a bit about your retirement. At least that was true for me. I'm 1000x better as an entrepreneur at age 42 than I was at age 27. But I'm also 100x more worried about some basic financial things like whether I will be able to retire, maintaining a mortgage, keep up financially with my spouse's career and her changing life expectations. And what helped stabilize m…

> keep up financially with my spouse's career and her changing life expectations This has been a big issue for multiple people in my social group. It's well known at this point that a relationship where a woman earns more is less stable - https://www.nytimes.com/2013/06/02/business/breadwinner-wive... Whether this is due to sexist expectations, increased likelihood of hypergamous relationships in women, etc., is not…

This sounds like sort of an academic take on the pattern of the woman earning more in a hetero couple. My actual experience is just about feelings of equity. There's a person who I love and respect and she's done a lot to advance her own career over the 15 years we've been together. And so I want to be able to give her an equivalent amount to what she gives me.

Re: FounderPool: A community for founders to share risk and diversify their equity

#120

Post by eganist »

marcinzm wrote: post #104
eganist wrote: post #24

Earlier quoted context omitted.

How about 409A valuations for those who've bootstrapped? (You probably know what it is, but for non-founders or others who haven't been through it - https://carta.com/blog/what-is-a-409a-valuation/ )

Aren't 409A valuations significantly lower than VC valuations for the same company? So wouldn't bootstrapped companies be at a disadvantage by having to use a lower 409A while VC companies get to use the higher VC valuation? edit: I see, bootstrapped is their own pool so the two valuations never get compered against each other.

Does mean there's potentially more unforeseen upside from an acquisition exit though. I wonder if that might make the bootstrapped pool a more attractive pool to be a part of.
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