Earlier quoted context omitted.
So it's a forward contract...?
Yes, we see that as most frictionless way to accomplish this at scale
Is there more that can be read on this somewhere? How it's taxed, what're the implications, how is it structured?
FounderPool: A community for founders to share risk and diversify their equity
121–130 of 207 posts
Re: FounderPool: A community for founders to share risk and diversify their equity
#122Besides the obvious risk pooling, does this also help founders (esp. first-timers) with negotiating terms? It seems like the other pool members would stand to gain a lot from that.
Re: FounderPool: A community for founders to share risk and diversify their equity
#123Earlier quoted context omitted.
Thats like saying you'd never drive with someone who uses a seatbelt because wearing one means they don't "believe" in their ability to drive safely.
Interestingly, pedestrian injuries went up significantly after seatbelt laws, for the reason you note/deride.
That doesn't sound right... seatbelt laws forced people who otherwise would have felt confident enough to drive without it to wear one. Low confidence drivers always had the option to wear one at any time. From only study I could find on the subject [1]:
"We distinguish, following the literature, between fatalities among car occupants, who may be directly affected by using seat belts, and fatalities among nonoccupants (pedestrians, bicyclists, and motorcyclists), who do not use seat belts and can thus be affected by seat belt use only indirectly... Our findings indicate that seat belt use significantly reduces fatalities among car occupants, but does not appear to have any statistically significant effect on fatalities among non-occupants. Thus, we do not find significant evidence for compensating behavior."
Maybe the invention of seat belts could have that effect, but that coincided with so many other changes to automobile technology / urban development that any observed effects are correlated at best.
Re: FounderPool: A community for founders to share risk and diversify their equity
#124Besides the obvious risk pooling, does this also help founders (esp. first-timers) with negotiating terms? It seems like the other pool members would stand to gain a lot from that.
You could consider the other members of the pool as an extension of your advisory board. They are incentivized to share their resources, wisdom, network, strategy, and 1-1 help on specific needs like this.
Re: FounderPool: A community for founders to share risk and diversify their equity
#125I will never invest in a startup where the founder(s) don't believe in their companies. Moving forward all terms I negotiate will explicitly state that this (e.g. things like FounderPool) will not be a possible scenario.
So you would never invest in a founder who does the rational thing? Believing in your own company doesn't preclude one from believing in other companies as well.
Say the founder estimates their startup has an 80% chance of succeeding; they pool 5% of their equity given the non-linearity of the utility of money (the additional 5% upside is negligible in a large exit). You would immediately dismiss that founder entirely because of this choice?
Re: FounderPool: A community for founders to share risk and diversify their equity
#126My two cents: I think this is a fantastic idea and I've wanted to see something like this for years. That said, this is one of those things where unfortunately the reputation of the persons behind FounderPool matter a lot to me, and other founders. Yet there's no info on the site about who's running this. Founders are making a massive gamble putting their companies into this novel legal arrangement and I'd want to see someone(s) reputable and well respected by the broader community at the helm.
I'd also make it crystal clear how FounderPool plans to make money. I see the website copyrighted to Heterodox Capital LLC. What's the distinction between these two entities? Will either of these orgs be taking a management fee from the equity put into the pool? If so, how much? I see nothing on the website about compensation which makes me uneasy about pursuing this further.
All that said, the core idea, de-risking founders is a massive opportunity and someone's eventually going to get this right and make entrepreneurship a viable path for thousands of talented founders who wouldn't otherwise start a company.
Re: FounderPool: A community for founders to share risk and diversify their equity
#127This 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…
As mean as that might sound, that is exactly what I assumed the VC reaction would be. I also thought equity agreements heavily restricted how employee-shareholders can sell their stock, and you can't just promise away shares to others without consent of the investors as if that somehow bypasses the restriction?
Re: FounderPool: A community for founders to share risk and diversify their equity
#128Re: FounderPool: A community for founders to share risk and diversify their equity
#129Earlier quoted context omitted.
Good way to get oneself kicked out of the pool before fully vesting.
How do you legally kick them out?
Because of the condition for participation in the pool is that your stock should continue to vest, for the membership shares in the pool to continue to vest.
Re: FounderPool: A community for founders to share risk and diversify their equity
#130This 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
Exactly the response I wish every founder has ready, when they hear this line of objection from their VC.