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FounderPool: A community for founders to share risk and diversify their equity

founderpools.com

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Re: FounderPool: A community for founders to share risk and diversify their equity

#21

Post by geoburke »

whatl3y wrote: post #14

> Apply to a pool in your startup category, within 3 months of the valuation event. Most "valuation events" for startups are seed or series X fundraisers, no? So how could founders who bootstrap participate in this, if at all?

VCs and angels act as a signal as well as what sets valuation. The model works best in standard tech startup lifecycle. But as the model catches on, there could be a future where non-investment but revenue-generating businesses form a pool, as well as a lifestyle business pool, or a pre-revenue, pre-product pool.

Re: FounderPool: A community for founders to share risk and diversify their equity

#22

Post by csentropy »

kumarski wrote: post #2

I have questions buzzing through my head. How does this work? If it's this good, why aren't VC's already doing this amongst portfolio founders? How do you catch companies founded at the same time with close valuations to do "shared pools" equitably given all parameters?

1. Pool construction happens by peer selection. All participating founders submit rank order lists and we construct pools using Gale-Shapley algorithm (a version) 2. I wondered ht3 same. A few like FF have thought about it, but they have a financial conflict between preferred and common (LP obligations) the makes it complicated to do. With founderpoool, they can 3. YC and like. Eventually, we hope this becomes the standard model for all founders when they start

Re: FounderPool: A community for founders to share risk and diversify their equity

#23

Post by gadders »

jaronlukas wrote: post #11

This is a great idea. I'd be willing to do this with my keto cereal companies if there was a pool of other promising food startups.

I would suggest for this to work as a way to share risk, you would want to have a pool of companies whose returns are not correlated.

Re: FounderPool: A community for founders to share risk and diversify their equity

#24

Post by eganist »

manojdv wrote: post #19
whatl3y wrote: post #14

> Apply to a pool in your startup category, within 3 months of the valuation event. Most "valuation events" for startups are seed or series X fundraisers, no? So how could founders who bootstrap participate in this, if at all?

We are using this as a screening for adverse selection, but founders who are bootstrapped can also apply if they have proven traction (we have a few stellar startups who were highly ranked but never raised money)

How about 409A valuations for those who've bootstrapped?

(You probably know what it is, but for non-founders or others who haven't been through it - https://carta.com/blog/what-is-a-409a-valuation/)

Re: FounderPool: A community for founders to share risk and diversify their equity

#25

Post by csentropy »

sshamoon wrote: post #3

Doesn't this de-incentivize founders since they're giving up their most valuable asset, their equity?

Good question. It hasn't empirically. See founders taking money off the table in secondary in series A, Airbnb etc.

Plus, financially derisked founders are paid a premium (those with previous exits) by VC.

So we know that this is mostly an academic argument, but it is a resasanoble concern.

Moreover, if 90-95% of your holdings are your company, you are still motivated to make it a success, despite the 5-10% diversification. And most great founders are motivated by more than pure financial upside.

Re: FounderPool: A community for founders to share risk and diversify their equity

#26

Post by gadders »

Wouldn't you want to pool with companies that AREN'T in the same market area? I would imagine you would want to try and diversify membership so that returns aren't correlated.

Also if people are in the same group are in the same vertical, isn't there a risk of competition?

Still think it's a good idea though.

Re: FounderPool: A community for founders to share risk and diversify their equity

#27

Post by csentropy »

gadders wrote: post #23
jaronlukas wrote: post #11

This is a great idea. I'd be willing to do this with my keto cereal companies if there was a pool of other promising food startups.

I would suggest for this to work as a way to share risk, you would want to have a pool of companies whose returns are not correlated.

It works both ways.

1. In a verticalized approach, your startup risk approaches your sector risk, if pool is large enough.

2. In a stage based pool approach (sector agnostic), risk is more diversified but rankings will be less meaningful. For ex, a rocket company founder may not be a good judge of CPG companies.

Re: FounderPool: A community for founders to share risk and diversify their equity

#28

Post by csentropy »

BlockchainMike wrote: post #5

Is this going to be a single pool, or will founders be organized into rounds? What sort of support are founders expected to provide to other founders in the pool?

1. Single pool, based on rounds, but new companies can join a pool with consent from all aexisting companies

2. Support is entirely up to them, but the goal is to create an engaged community with strong incentive alignment to help with investor pipeline, customer intros, partnerships, hiring, strategic advice etc

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