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They thought they were joining an accelerator – instead they lost their startups

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Re: They thought they were joining an accelerator – instead they lost their startups

#21

Post by presidentender »

CharlieDigital wrote: post #18
ldjkfkdsjnv wrote: post #15

A popular venture studio based out of NYC is like this. They take 60% of the equity from the start, and provide 1M in capital (which is decent amount). The narrative is that they provide significant guidance, follow on capital, etc. But in reality, none of their guidance or follow on capital comes through. For a first time founder its okay for a year, any longer and its really a financial disaster versus just working…

> A popular venture studio based out of NYC is like this Sounds like Fractal. Supposedly, the value add is that they've already done the due diligence and market research on some product idea. They match a team (CEO + CTO) to the idea and provide the funding. Do not know of any well known companies to have come out of this model, but if they're still around, it must be generating some returns for it to be worthwhile.

Fractal seems to have addressed the entire market they had identified. It doesn't appear that they're still recruiting founders.

I was in their pipeline and interviewing potential business cofounders, but chose to go the traditional venture route - it didn't work out, but I don't think I'd have succeeded at the Fractal business either.

Re: They thought they were joining an accelerator – instead they lost their startups

#22

Post by paxys »

ldjkfkdsjnv wrote: post #15

A popular venture studio based out of NYC is like this. They take 60% of the equity from the start, and provide 1M in capital (which is decent amount). The narrative is that they provide significant guidance, follow on capital, etc. But in reality, none of their guidance or follow on capital comes through. For a first time founder its okay for a year, any longer and its really a financial disaster versus just working…

At that point they are just hiring an employee. Once you get the $1M what incentive is there to continue to hustle while being a minority shareholder in your own company?

Re: They thought they were joining an accelerator – instead they lost their startups

#23

Post by moralestapia »

iamleppert wrote: post #6

Add TechStars to the list of accelerators to be avoided at all costs. They make an investment in your company on terms they can claw back the money at any time. Most of these accelerators provide little to no value, in my experience. Unless you need to know what “product market fit” means. Hilarious.

Most VCs add zero value aside from the money. Bootstrapping is always better, if you can do it, of course.

Exhibit A: Naval Ravikant, the flagship SV investor, widely regarded to as "a wise man", just released a kind of crappy messaging app that flopped. Imagine having unlimited leverage, unlimited money, unlimited reputation, a huge audience already in place and still that not being enough to put out a competent product. Now imagine this guy asking for 20-30% of your company equity in exchange for "advice", lol.

Re: They thought they were joining an accelerator – instead they lost their startups

#24

Post by Joel_Mckay »

Rule #14: "Never outsource economic control structures, or one may end up indentured"

Sometimes one needs to admit they were conned, and start over...

When people start out, no one tells them there is an ecosystem of legal-cons that target vulnerable small firms. Even this forum has users the constantly spam people with various funding scams.

My condolences, some lessons can take a year or two to recover... =3

Re: They thought they were joining an accelerator – instead they lost their startups

#25

Post by ldjkfkdsjnv »

presidentender wrote: post #21
CharlieDigital wrote: post #18

Earlier quoted context omitted.

> A popular venture studio based out of NYC is like this Sounds like Fractal. Supposedly, the value add is that they've already done the due diligence and market research on some product idea. They match a team (CEO + CTO) to the idea and provide the funding. Do not know of any well known companies to have come out of this model, but if they're still around, it must be generating some returns for it to be worthwhile.

Fractal seems to have addressed the entire market they had identified. It doesn't appear that they're still recruiting founders. I was in their pipeline and interviewing potential business cofounders, but chose to go the traditional venture route - it didn't work out, but I don't think I'd have succeeded at the Fractal business either.

They stopped getting funded bc of a mix of interest rates and company underperformance

Re: They thought they were joining an accelerator – instead they lost their startups

#26

Post by ultrasaurus »

> So she paid a $7,500 deposit and was all set to join Newchip when a founder friend told her to “never pay for introductions.”

Hopefully everyone knows this here, but if you paid for an introduction it's a negative signal: just cold email.

That being said, I'll make intros for only $6,500 and no warrants.

Re: They thought they were joining an accelerator – instead they lost their startups

#27

Post by ldjkfkdsjnv »

moralestapia wrote: post #23
iamleppert wrote: post #6

Add TechStars to the list of accelerators to be avoided at all costs. They make an investment in your company on terms they can claw back the money at any time. Most of these accelerators provide little to no value, in my experience. Unless you need to know what “product market fit” means. Hilarious.

Most VCs add zero value aside from the money. Bootstrapping is always better, if you can do it, of course. Exhibit A: Naval Ravikant, the flagship SV investor, widely regarded to as "a wise man", just released a kind of crappy messaging app that flopped. Imagine having unlimited leverage, unlimited money, unlimited reputation, a huge audience already in place and still that not being enough to put out a competent pro…

If the advice was a slam dunk they would just start the company. There are too many factors for it to be useful, and they know that. Theres too much nuance

Re: They thought they were joining an accelerator – instead they lost their startups

#28

Post by MichaelZuo »

moralestapia wrote: post #23
iamleppert wrote: post #6

Add TechStars to the list of accelerators to be avoided at all costs. They make an investment in your company on terms they can claw back the money at any time. Most of these accelerators provide little to no value, in my experience. Unless you need to know what “product market fit” means. Hilarious.

Most VCs add zero value aside from the money. Bootstrapping is always better, if you can do it, of course. Exhibit A: Naval Ravikant, the flagship SV investor, widely regarded to as "a wise man", just released a kind of crappy messaging app that flopped. Imagine having unlimited leverage, unlimited money, unlimited reputation, a huge audience already in place and still that not being enough to put out a competent pro…

I've seen this 'Naval' on Twitter, or now X, but there's hundreds of accounts with that shtick, catering to various groups, so it seems doubtful.

Are you sure he was 'the flagship SV investor, widely regarded...' among serious SV folks?

Or just among the peanut gallery?

Re: They thought they were joining an accelerator – instead they lost their startups

#29

Post by Terr_ »

Joel_Mckay wrote: post #24

Rule #14: "Never outsource economic control structures, or one may end up indentured" Sometimes one needs to admit they were conned, and start over... When people start out, no one tells them there is an ecosystem of legal-cons that target vulnerable small firms. Even this forum has users the constantly spam people with various funding scams. My condolences, some lessons can take a year or two to recover... =3

That reminds me of a book quote, about a semaphore transmission-line company as a kind of fantasy-version analogy for modern telecoms.

> "[My father] was chairman of the original Grand Trunk Company. The clacks was his vision. Hell, he designed half of the mechanisms in the towers. And he got together with a group of other engineers, all serious men with slide rules, and they borrowed money and mortgaged their houses and built a local system and poured the money back in and started building the Trunk. There was a lot of money coming in; every city wanted to be in on it, everyone was going to be rich. [...]

> Everything was going fine and suddenly he got this letter and there were meetings and they said he was lucky not to go to prison for, oh, I don't know, something complicated and legal. But the clacks was still making huge amounts. Can you understand that? Reacher Gilt and his gang acted friendly, oh yes, but they were buying up the mortgages and controlling banks and moving numbers around and they pulled the Grand Trunk out from under us like thieves. All they want to do is make money. They don't care about the Trunk. They'll run it into the ground and make more money by selling it."

-- Going Postal by Terry Pratchett

Re: They thought they were joining an accelerator – instead they lost their startups

#30

Post by kayodelycaon »

hn_throwaway_99 wrote: post #4

What a psychopath. To anyone who may be in this kind of situation, trust your instincts and leave . It will not get better. You will find other, better opportunities elsewhere. Best lesson I ever learned was from a high level exec that had just started at the company where I worked. He quit in 2 weeks. Impressively, he did it without drama or really even causing bad will - he just told the CEO it wasn't a match, and…

> I was too worried about what it would look like to leave a company so soon after joining.

You don’t have to put every job on your resume. :)

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