4 ms·

Looks like he won't fund you if billionaires find your company before he does, and he can't get the cheap equity he'd like. Makes sense for him, but you're also

by dkural 10y ago

Looks like he won't fund you if billionaires find your company before he does, and he can't get the cheap equity he'd like. Makes sense for him, but you're also better off not raising from him in that particular scenario. He calls this 'cap table is messed up', whereas he's just late and out-priced by the bigger boys. Your cap table is just fine.

Robin_Message 10y ago
He does come off as pretty arrogant, but in the cap table example I thought it was the raising new money at a lower valuation that was the problem. Most investors wouldn't want to be in such a down round; and I guess one source of down rounds is too rich initial investors?
crdb 10y ago
The funding market, like that for employment and marriage, clears at different prices for different individuals. I'd say the number of founders who can truly aspire to get funded by the "Big Boys" (and have the choice you talk about) is relatively small - for example my lack of connections in the US precludes me from raising from them because I can't get a proper warm intro. You need to align a lot of stars. That being said, I think he was referring to the complexity of multi-note cap tables (and time and mental effort required to deal with their preferred stock classes etc. vs 5 equivalent other deals using a vanilla structure) rather than the billionaires outbidding him. He talks more about it in another post [1]. Having been on a desk that traded exotics I very much agree that (unnecessary) complication in financial products is not a good thing, and is usually associated with people hoping you'll slip up. [1] https://www.quora.com/Y-Combinator-What-are-the-pros-and-cons-of-YCs-SAFE-securities-versus-convertible-notes/answer/Jason-M.-Lemkin https://www.quora.com/Y-Combinator-What-are-the-pros-and-con...

4 ms·

Looks like he won't fund you if billionaires find your company before he does, and he can't get the cheap equity he'd like. Makes sense for him, but you're also

by dkural 10y ago

Robin_Message 10y ago
He does come off as pretty arrogant, but in the cap table example I thought it was the raising new money at a lower valuation that was the problem. Most investors wouldn't want to be in such a down round; and I guess one source of down rounds is too rich initial investors?
crdb 10y ago
The funding market, like that for employment and marriage, clears at different prices for different individuals. I'd say the number of founders who can truly aspire to get funded by the "Big Boys" (and have the choice you talk about) is relatively small - for example my lack of connections in the US precludes me from raising from them because I can't get a proper warm intro. You need to align a lot of stars. That being said, I think he was referring to the complexity of multi-note cap tables (and time and mental effort required to deal with their preferred stock classes etc. vs 5 equivalent other deals using a vanilla structure) rather than the billionaires outbidding him. He talks more about it in another post [1]. Having been on a desk that traded exotics I very much agree that (unnecessary) complication in financial products is not a good thing, and is usually associated with people hoping you'll slip up. [1] https://www.quora.com/Y-Combinator-What-are-the-pros-and-cons-of-YCs-SAFE-securities-versus-convertible-notes/answer/Jason-M.-Lemkin https://www.quora.com/Y-Combinator-What-are-the-pros-and-con...