31–40 of 163 posts
A founder who believes in his business, will never cash out early. period. He would always get more after an IPO or exit. So why would he? I assume the founders are not stupid, they know their valuation is not justified.
Zuckerberg, Moskovitz, and Parker each got $1m from Accel when they raised their $12.7m Series A according to David Kirkpatrick's The Facebook Effect.
To me, being greedy is hardly the worst trait to have as entrepreneur.
I must have missed the post where a VC said "Guys, sorry, love your company but I couldn't in good conscience participate in a round where the rich people get paid and the poor people are told to wait for an exit." I must have missed that post quite frequently, because that describes every VC round ever . A $120 million investment round means that about $2.4 million in cash money just moved from the limited partners…
Are you suggesting that this VC pattern justifies the actions of founders who take $21M as dividends ? (to be more precise - founders of a young private company that is dependent on external investment for financing itself)
A founder who believes in his business, will never cash out early. period. He would always get more after an IPO or exit. So why would he? I assume the founders are not stupid, they know their valuation is not justified.
You missed the point, they take the money as dividens. They are not selling their stock for that $20M lump. The only 'foul' thing here, is that their employees (option holders) will probably get nothing.
I must have missed the post where a VC said "Guys, sorry, love your company but I couldn't in good conscience participate in a round where the rich people get paid and the poor people are told to wait for an exit." I must have missed that post quite frequently, because that describes every VC round ever . A $120 million investment round means that about $2.4 million in cash money just moved from the limited partners…
I will agree that dividends should generally be used when the investors are able to invest the money better than the company can.
eg. If an putting the cash into ops will generate a 6% return and investors are able to earn 8% then a dividend should be issued.
If you can fill out your round, get cash and not have to dilute as a CEO why wouldn't you? That would be like a VC turning down free equity.
I must have missed the post where a VC said "Guys, sorry, love your company but I couldn't in good conscience participate in a round where the rich people get paid and the poor people are told to wait for an exit." I must have missed that post quite frequently, because that describes every VC round ever . A $120 million investment round means that about $2.4 million in cash money just moved from the limited partners…
It is generally accepted that a vast majority of a VC partner's income comes from their share of the fund's return, not from the management fee. It is not unheard of for a VC firm's costs exceed the management fee, such that the partners loose money unless the fund has a positive return.
I must have missed the post where a VC said "Guys, sorry, love your company but I couldn't in good conscience participate in a round where the rich people get paid and the poor people are told to wait for an exit." I must have missed that post quite frequently, because that describes every VC round ever . A $120 million investment round means that about $2.4 million in cash money just moved from the limited partners…
But this article is about something new - a dividend that mainly goes only to the founders. It's about entrepreneurs screwing early-employees, entities that until now I've always considered as been in the same bucket. You can rightfully claim that the messenger sucks (which might be well-known) but that doesn't imply anything on the message itself (or its novelty).
A founder who believes in his business, will never cash out early. period. He would always get more after an IPO or exit. So why would he? I assume the founders are not stupid, they know their valuation is not justified.
You missed the point, they take the money as dividens. They are not selling their stock for that $20M lump. The only 'foul' thing here, is that their employees (option holders) will probably get nothing.
Earlier quoted context omitted.
My hunch is that for early-enough employees the dividend value could dwarf the exercise price, making the decision to exercise a no-brainer.
Hence the mention of capital gains taxes.
I must have missed the post where a VC said "Guys, sorry, love your company but I couldn't in good conscience participate in a round where the rich people get paid and the poor people are told to wait for an exit." I must have missed that post quite frequently, because that describes every VC round ever . A $120 million investment round means that about $2.4 million in cash money just moved from the limited partners…
VCs are guys handling money, they need entrepreneurs (guys getting things done) and vice-versa. They sign a contract which mainly defines how each gets to profit from the other one and the boundaries of their interactions afterwards. It's well-known and the web is full of articles about preferred stock, liquidation preference, convertible debt and similar topics. But this article is about something new - a dividend t…
Yes, that surprised me a lot! Especially from founders that are somewhat "famous" and are connected to YC. I expected they don't play these tricks. Greed?
Anyone knows how their employees reacted to this news? If I would have worked 50+ hours for year(s) and then read this... :(