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Earlier quoted context omitted.
http://www.ycombinator.com/documents/
Michael, do you know where can I find stats for the number of founders per company accepted in YC? Edit: I found it here. https://blog.ycombinator.com/common-misconceptions-about-app...
This is a common oversimplification, but it's somewhat dangerous and I would be happier if people were more cautious in what they said here. It simply doesn't mean what you said; it means the founder has sold at least 5% of the company. If you're going to either raise 50m or shut the company and ditch your investors, then it's a wash; but if find yourself in a low-money scrappy situation, which realistically is where most non-YC companies are, it's very significant.
Convertibles and other structurally similar securities, in contrast to priced equity rounds, essentially have built-in down-round protection for investors. They have advantages, too, not least the speed in which deals can be done, but if you can do a priced round or a convertible round at similar speed and at similar cost, give serious consideration to taking the priced round.
Earlier quoted context omitted.
Michael, do you know where can I find stats for the number of founders per company accepted in YC? Edit: I found it here. https://blog.ycombinator.com/common-misconceptions-about-app...
The average for the last batch was 2 founders.
Earlier quoted context omitted.
Michael, do you know where can I find stats for the number of founders per company accepted in YC? Edit: I found it here. https://blog.ycombinator.com/common-misconceptions-about-app...
The average for the last batch was 2 founders.
> $500k safe at a $10 million post-money valuation cap means the founder has sold 5% of the company. This is a common oversimplification, but it's somewhat dangerous and I would be happier if people were more cautious in what they said here. It simply doesn't mean what you said; it means the founder has sold at least 5% of the company. If you're going to either raise 50m or shut the company and ditch your investors,…
> $500k safe at a $10 million post-money valuation cap means the founder has sold 5% of the company. This is a common oversimplification, but it's somewhat dangerous and I would be happier if people were more cautious in what they said here. It simply doesn't mean what you said; it means the founder has sold at least 5% of the company. If you're going to either raise 50m or shut the company and ditch your investors,…
I think the other thing to take into account is that if you're doing a comparison of safes, notes and priced rounds, it's not just a matter of seeing if speed and cost are equal, but what else you might have to give up in terms of rights. Priced rounds can come with downround protection too (often do), as well as board seats and investor vetoes on financings, sales of the company, etc. Convertible notes are debt so the investors will have a technical right to demand their money back after a set time (maturity).
> $500k safe at a $10 million post-money valuation cap means the founder has sold 5% of the company. This is a common oversimplification, but it's somewhat dangerous and I would be happier if people were more cautious in what they said here. It simply doesn't mean what you said; it means the founder has sold at least 5% of the company. If you're going to either raise 50m or shut the company and ditch your investors,…
Have you ever seen the legal fees of priced vs convertibles be the same? I certainly haven't.
Nice to see the offer getting better! I wonder about moral hazard in early stage funding. What if YC were to offer rent and salary for founders for 12 months? This would similarly change the dynamics around founders worrying about money while avoiding some of the temptation to over-spend and generally waste funding before building a product.
Nice to see the offer getting better! I wonder about moral hazard in early stage funding. What if YC were to offer rent and salary for founders for 12 months? This would similarly change the dynamics around founders worrying about money while avoiding some of the temptation to over-spend and generally waste funding before building a product.
Seems like the founder should be the one who figures out how to best spend the money no?