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Conflicted Capital

blog.aaronkharris.com

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Re: Conflicted Capital

#21

Post by sebmellen »

k__ wrote: post #20
rsweeney21 wrote: post #5

Raised money from VCs for my last startup. Series A investor made all sorts of overtures about how founder friendly they were and how supportive they would be. The week after we closed our series A they told me I had to hire a COO. I asked, "You trying to get me to hire my replacement?" "No, we'd never do that. How could you even think that?" Less than two months after we hired the COO they fired me. The COO was made…

Why would you even give up more than 49% of your company?

You might not realize that a 5% stake with two board seats is much more powerful than a 25% stake with one board seat. Corporate dynamics are weird.

Re: Conflicted Capital

#22

Post by Andy_G11 »

rsweeney21 wrote: post #5

Raised money from VCs for my last startup. Series A investor made all sorts of overtures about how founder friendly they were and how supportive they would be. The week after we closed our series A they told me I had to hire a COO. I asked, "You trying to get me to hire my replacement?" "No, we'd never do that. How could you even think that?" Less than two months after we hired the COO they fired me. The COO was made…

Did you and your accountant review the shareholders' agreement thoroughly before finalising the fundraising with the new investors?

Re: Conflicted Capital

#23

Post by rsweeney21 »

k__ wrote: post #20
rsweeney21 wrote: post #5

Raised money from VCs for my last startup. Series A investor made all sorts of overtures about how founder friendly they were and how supportive they would be. The week after we closed our series A they told me I had to hire a COO. I asked, "You trying to get me to hire my replacement?" "No, we'd never do that. How could you even think that?" Less than two months after we hired the COO they fired me. The COO was made…

Why would you even give up more than 49% of your company?

It doesn't matter what % of your company you own. What matters is whether or not you control a majority of the board seats.

Re: Conflicted Capital

#24

Post by [deleted] »

vcvc wrote: post #17
rsweeney21 wrote: post #5

Raised money from VCs for my last startup. Series A investor made all sorts of overtures about how founder friendly they were and how supportive they would be. The week after we closed our series A they told me I had to hire a COO. I asked, "You trying to get me to hire my replacement?" "No, we'd never do that. How could you even think that?" Less than two months after we hired the COO they fired me. The COO was made…

What VC?

[deleted]

Re: Conflicted Capital

#25

Post by covidthrow »

rsweeney21 wrote: post #15
stanrivers wrote: post #8

Earlier quoted context omitted.

This is not cool - I am sorry. Investor here - they should never do that. Make sure you tell others about how this went down. If they were planning on getting rid of you, that needs to be part of the upfront discussion etc.

They are a large and very lawsuit happy VC. It's not worth the risk to warn other people about this VC.

It would be a shame if someone else created a throwaway account to express similar sentiment about a similar firm and named them.

Re: Conflicted Capital

#26

Post by clairity »

pm90 wrote: post #3
zuhayeer wrote: post #2

My issue with the whole fundraising circuit (esp for low cap-ex startups) is how much you have to strain yourself to convince a non-customer to believe in you

Only slightly related to your point, but I find almost the entire VC community not one that I would want to be working with very closely with. It’s just not the kind of people I find interesting. Not that they’re not skilled or provide value, but the whole fundraising dance seems to be tiring and honestly pointless. Harkens back to an equally pointless endeavor I’ve been through before: the struggle to get good grade…

> "If I had a wish to materialize an ideal VC firm, it would be a place with both business types and highly skilled engineers who are on top of their skills and continue to build things."

idealab is somewhat like this. they cycle in engineers to work on an itch for a limited time on salary, then go through an internal round of fundraising (pitch idealab itself for seed money), then seek external rounds if there is traction.

branch[0] is a company that successfully launched from idealab this way. they started as a shift-swapping chat app for hourly workers and have branched (haha) into payments now.

[0]: https://www.branchapp.com/

Re: Conflicted Capital

#27

Post by [deleted] »

choppaface wrote: post #16
throwaway98797 wrote: post #12

Earlier quoted context omitted.

That really sucks. I think in the bubble of YC seems like this doesn’t happen but then there are counter examples like yours. Thank you for sharing.

I know of at least three successful YC companies that fired founders and then took a hit... YC isn't that special of a bubble, especially these days.

[deleted]

Re: Conflicted Capital

#28

Post by k__ »

sebmellen wrote: post #21
k__ wrote: post #20

Earlier quoted context omitted.

Why would you even give up more than 49% of your company?

You might not realize that a 5% stake with two board seats is much more powerful than a 25% stake with one board seat. Corporate dynamics are weird.

Ah, okay.

I think, in Germany it's different, sorry.

Re: Conflicted Capital

#29

Post by pirate787 »

zuhayeer wrote: post #2

My issue with the whole fundraising circuit (esp for low cap-ex startups) is how much you have to strain yourself to convince a non-customer to believe in you

I didn't take VC and my company was chronically underfunded and died a long, slow, painful death to VC backed competitors. I'd take VC if I did it over again-- the focus and faster cycle would have made a difference, even if I failed again it would have been 3 years wasted not 10.

Re: Conflicted Capital

#30

Post by nradov »

k__ wrote: post #20
rsweeney21 wrote: post #5

Raised money from VCs for my last startup. Series A investor made all sorts of overtures about how founder friendly they were and how supportive they would be. The week after we closed our series A they told me I had to hire a COO. I asked, "You trying to get me to hire my replacement?" "No, we'd never do that. How could you even think that?" Less than two months after we hired the COO they fired me. The COO was made…

Why would you even give up more than 49% of your company?

Because you need the money and have a weak negotiating position. Not every startup is like Facebook.
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