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.
We're invested in one. TrueMade Foods. Send me a note if you want to talk with them.
FounderPool: A community for founders to share risk and diversify their equity
81–90 of 207 posts
Re: FounderPool: A community for founders to share risk and diversify their equity
#82Techstars does something similar.
I believe founder institute does as well, but in their case they divide uo the pool into 4 parts, 3 of which go to FI, they local chapter, mentors and one back to founders if I remember right
Was about mentioning this as an FI alumni.. Awesome idea, kudos to the team.
Re: FounderPool: A community for founders to share risk and diversify their equity
#83I 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.
Doesn't that reasoning lead to saying that founders shouldn't get a salary from investors either (or only make minimum wage), since if they really believed in their idea they would be happy with equity and not money? After all, a salary means founders would be trading future risky returns for immediate low risk cash.
Founders really shouldn’t get a salary, or if they do, only the minimum to live.
Founders getting any more than just what they need to live incentivises people to raise money for personal gain rather than raising money to build a company.
It also really blurs the line between founders and employees. How can a founder justify taking a salary at the same or even higher level than an employee while also having a huge share? We didn’t get people moaning about how employees are taking risks until SV founders stopped holding up thier end of the bargain with regard to risk taking.
Re: FounderPool: A community for founders to share risk and diversify their equity
#84It’s a reasonable idea, but would make a lot more sense for employees. While outside forces impact companies, founders and executives are responsible for outcomes. Employees have little individual power to impact strategy and are more likely the victims of poor management decisions.
Thats true. We would eventually want to grow this to support employees (think about building your own option portfolio) and student ISAs etc. We are right now emphasizing the community aspect rather than just the equity swaps because for founders, the value is in the network.
Would not that hit the securities regulations on accredited investors where most of the employees won't qualify?
Re: FounderPool: A community for founders to share risk and diversify their equity
#85How do you overcome the adverse selection problem? ie. only founders who know their startups are duds want to diversify their holdings?
1) We screen companies based on their quality, ex: a round raised within the last 3-6 months. 2) Founders get to interact with participating companies and rank them based on their insight. Only companies that are highly ranked get into a pool. A pool is also dynamic and founders in the pool can invite new startups based on their interactions. Overall, this is based on the concept that founders are often good judges o…
Does a startup's equity in the pool vest over time? I'd be concerned about a startup joining the pool, and then immediately dissolving their company.
Re: FounderPool: A community for founders to share risk and diversify their equity
#86Earlier quoted context omitted.
Doesn't that reasoning lead to saying that founders shouldn't get a salary from investors either (or only make minimum wage), since if they really believed in their idea they would be happy with equity and not money? After all, a salary means founders would be trading future risky returns for immediate low risk cash.
Founders really shouldn’t get a salary, or if they do, only the minimum to live. Founders getting any more than just what they need to live incentivises people to raise money for personal gain rather than raising money to build a company. It also really blurs the line between founders and employees. How can a founder justify taking a salary at the same or even higher level than an employee while also having a huge sh…
Founders getting only the bare minimum to survive seems like a good way to exclude certain classes of people -- those without any assets to fall back on, those with families, to name a couple -- from becoming successful founders.
Re: FounderPool: A community for founders to share risk and diversify their equity
#87Earlier quoted context omitted.
Thats true. We would eventually want to grow this to support employees (think about building your own option portfolio) and student ISAs etc. We are right now emphasizing the community aspect rather than just the equity swaps because for founders, the value is in the network.
Would not that hit the securities regulations on accredited investors where most of the employees won't qualify?
yes, accreditation rules apply and typically founders qualify by virtue of stock paper value. For employees, later stage companies tend to workout because of stock values.
Re: FounderPool: A community for founders to share risk and diversify their equity
#88Earlier quoted context omitted.
1) We screen companies based on their quality, ex: a round raised within the last 3-6 months. 2) Founders get to interact with participating companies and rank them based on their insight. Only companies that are highly ranked get into a pool. A pool is also dynamic and founders in the pool can invite new startups based on their interactions. Overall, this is based on the concept that founders are often good judges o…
Does a startup's equity in the pool vest over time? I'd be concerned about a startup joining the pool, and then immediately dissolving their company.
Yes, big concern here, so vesting happens over time.
Re: FounderPool: A community for founders to share risk and diversify their equity
#89Earlier quoted context omitted.
I believe founder institute does as well, but in their case they divide uo the pool into 4 parts, 3 of which go to FI, they local chapter, mentors and one back to founders if I remember right
Was about mentioning this as an FI alumni.. Awesome idea, kudos to the team.
Thank you.
Re: FounderPool: A community for founders to share risk and diversify their equity
#90Why are you splitting sectors into different pools? Surely that reduces the diservification of risk, and increases the overlap between the companies, which creates blurred incentives?