Earlier quoted context omitted.
It would be a shame if someone else created a throwaway account to express similar sentiment about a similar firm and named them.
It doesn't take a lot of insight to look at the crunchbase of OP's former company and look who lead the series A...
Conflicted Capital
41–50 of 76 posts
Re: Conflicted Capital
#42Earlier quoted context omitted.
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.
Well....technically.... what matters is your ability to replace and/or appoint board members :)
Re: Conflicted Capital
#43> Founders need to understand that venture investing is a business where friendship is an input or an outcome, and not the other way around.
Does anybody know how to parse this?
Re: Conflicted Capital
#44Investors for software startups are not that great if you want your business to be self-sustaining without becoming a unicorn or a Ponzi scheme. I'm not saying that participating in bubbles cannot be economically rational, but venture capital today is especially suited for making decisions that are bad for everyone involved, prioritizing future valuation over good business. It's the same growth or sustainability choi…
"Investors for software startups are not that great if you want your business to be self-sustaining without becoming a unicorn or a Ponzi scheme.
"
- can you elaborate on this? Gut check wise this feels correct, but I'd like to hear your thoughts.
Re: Conflicted Capital
#45Earlier quoted context omitted.
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…
This is kind of what I'm working on. Basically a product studio with LPs
It's been done, I know of a couple of these. They start out well intentioned and end up being backseat drivers in every company they launch, usually with bad side effects.
Re: Conflicted Capital
#46Raised 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…
So, that's a bad trip, sorry to hear about this, and noted.
Re: Conflicted Capital
#47Raised 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…
Being friendly is much like being powerful - if you have to say that you are, you aren't.
(with tons of apologies to Margaret Thatcher)
Re: Conflicted Capital
#48Raised 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…
>The lesson for founders is to never, ever, ever give up control of your board/company. Always maintain control of a majority of the board seats.
Maybe you're too close to the situation so what you say above feels to you like a universal truth but it actually doesn't help me as a reader.
To raise the quality of discussion, we'd need to know what your realistic options were at the time you raised Series A.
E.g... Did you have meaningful revenue making VC capital optional? Did you need VC money to have a runway and make payroll for a few months?
In other words, if you're in a situation where rejecting VC money means your business shuts down, it becomes a moot point if you're still 100% in control of all board seats.
As for board seats composition, was it something like You=1, VC=1, and Independent=1? If so, was the independent automatically on VC's side to fire you or were they truly independent?
If you don't want to get into the details to maintain privacy, that's understandable. But also understand that your advice born out of your experience doesn't have enough context for us.
Re: Conflicted Capital
#49> Founders need to understand that venture investing is a business where friendship is an input or an outcome, and not the other way around. Does anybody know how to parse this?
"Your business colleagues are not your friends"
Re: Conflicted Capital
#50Another note about 'internal' investors getting preferential treatment as opposed to outsiders: this is usually a result of SHA conditions and elements in the articles of incorporation that stipulate that in case of a sale or issue of new shares existing shareholders have first right of refusal. That this makes for a less competitive environment is something that everybody seems to take as normal, but after reading this article I'm wondering if it really should be normal or of there are other important reasons why this right always seems to be granted.