111–120 of 139 posts
https://signalvnoise.com/posts/1650-get-satisfaction-or-else
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then google seemed to delist them in a panda And rightfully so. They were a pest, just like the spam-site by that Calamaris guy from Netscape around the same time. Lesson learned: If you depend on search traffic then don't be obnoxious. Otherwise nobody will speak up for you when Google snaps your neck. Hey Google, why is Quora (expert-sexchange 2.0) still polluting my search results anyway?
Could be worse, could be a Yahoo Answers result.
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Liquidation is usually the multiple of the investment money, that the investor gets back before anyone else gets their money. Like earlier explained, later investors generally get senior rights to earlier investors; so they get their money out first. https://en.wikipedia.org/wiki/Liquidation_preference
Is there a recursive model that explains why later investors have senior preferences?
This is pretty common. When startups don't sell for above their valuations, the investors are going to get their money back first (and in varying cases more, depending on liquidation preferences). Pulled GetSatisfaction's tables from PitchBook, take a look at their B round: http://i.imgur.com/zUzDrFp.png Post valuation at over $50M - no data yet on the amount of the acquisition, but if it was equal to that or less (o…
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I forgot about the debt holders. So if there was any debt (including un-converted convertible notes), the pecking order is: 1) Debt holders 2) Most senior shareholders and their liquidation preference 3) Less senior shareholders and their liquidation preference ... 99) Common stock holders This is actually to align the founder incentives in shooting for a big exit. Insert any other order of preferences, and the found…
Number one preference is the tax man isn't it? At least in the UK, he always gets paid first.
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>But leaving the founders of a company with nothing while others earning money feels completely wrong. Why? They founded a company which tanked. They made poor decisions along the way which led to said taking. They did it on someone else's dime. No one made money here, so why shouldn't the investors get some of the investment back?
Isn't the whole point of venture capital that you take on a large risk in return for a large potential payout. VC is called "risk capital" in a number of languages for a reason.
It's a tradeoff. And sometimes it can work to your benefit. E.g. if you and your potential investor disagrees about the level of risk and/or about the potential size of an exit, you can try to negotiate a multiple liquidation preference in return for less shares.
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VCs aren't assholes, generally, but their standard terms are a bad deal for founders, generally. I've thought about this a lot over the past 25 years. In the past I've seen VCs do really bad things (like force decisions that set the company back 18 months bad.) The problem is, when you get a "good" VC that doesn't force bad decisions on you ,the cost of the money, mostly in deal terms, is too damn high. And when you…
> Don't even get me started on founders vesting their shares. You build a company, you have sweat equity, but the VC wants to reset the vesting? Why ? You can't vote unvested shares. They will give you a song and dance about "what if a founder leaves?" Well, we covered that in our articles of incorporation because we're not idiots, but they will ignore that and insist that "all founders must vest all their shares". (…
They're saying that VCs use that approach as an additional means to control the company in case things aren't going the way they want.
The parent's position is that the founder shouldn't have to vest their shares like that, because they built the company and their shares should be regarded as fully vested since the founders put in sweat equity to start it all (essentially saying that the shares are fully paid up from the process of starting the business, and that vesting the shares takes those shares back from the founder, sort of like taking away that sweat equity effort).
I have very limited knowledge of this situation, but, I'm gonna pile on anyway: With that kind of money raised, the founders didn't get "nothing". They got a salary, probably a decent one, for however long they were running the thing. Which is more than many startup founders get out of businesses that fail. If they don't have personal debt, or didn't lose relationships or friendships, they came out ahead of many star…
VCs aren't assholes, generally, but their standard terms are a bad deal for founders, generally. I've thought about this a lot over the past 25 years. In the past I've seen VCs do really bad things (like force decisions that set the company back 18 months bad.) The problem is, when you get a "good" VC that doesn't force bad decisions on you ,the cost of the money, mostly in deal terms, is too damn high. And when you…
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> Don't even get me started on founders vesting their shares. You build a company, you have sweat equity, but the VC wants to reset the vesting? Why ? You can't vote unvested shares. They will give you a song and dance about "what if a founder leaves?" Well, we covered that in our articles of incorporation because we're not idiots, but they will ignore that and insist that "all founders must vest all their shares". (…
The parent is, basically, disagreeing with the practice of making founders vest their shares when a VC comes on board. They're saying that VCs use that approach as an additional means to control the company in case things aren't going the way they want. The parent's position is that the founder shouldn't have to vest their shares like that, because they built the company and their shares should be regarded as fully v…
Asking founders to re-vest nullifies the effort they have put until now and makes it unattractive for founders to seek VC money.
Generally whoever has the greater need makes the bigger compromises...
I have very limited knowledge of this situation, but, I'm gonna pile on anyway: With that kind of money raised, the founders didn't get "nothing". They got a salary, probably a decent one, for however long they were running the thing. Which is more than many startup founders get out of businesses that fail. If they don't have personal debt, or didn't lose relationships or friendships, they came out ahead of many star…
VCs aren't assholes, generally, but their standard terms are a bad deal for founders, generally. I've thought about this a lot over the past 25 years. In the past I've seen VCs do really bad things (like force decisions that set the company back 18 months bad.) The problem is, when you get a "good" VC that doesn't force bad decisions on you ,the cost of the money, mostly in deal terms, is too damn high. And when you…
There is definitely a need for a response cheat sheet to the most typical term sheet bullshit and while I get not all deals are equal, there are accordingly only so many stages of startup where the range of responses are necessary.