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We kept a majority of shares The battle of the wills described in this piece could only have been possible because the founders retained their majority control

by grellas 16y ago

We kept a majority of shares The battle of the wills described in this piece could only have been possible because the founders retained their majority control and even then it was obviously painful as could be dealing with the types of bullying investors described. Had it not been for this, the founders would have been crushed.

hga 16y ago
And the company would have died. The VCs needed a short term 10X or better return on their money due to the fund ending and were willing to bet everything for a chance to get it since "shares in an illiquid company are useless to the VC". Profitable enough to return 2X the VCs' money and growing at "double digit rates", just not enough. The 5 to 10 year lifetime of current VC funds coupled with the slow (at best) economy and the much greater difficultly in cashing out post the doc.com crash suggests that taking VC money today is particularly risky and taking it near the end of the fund's life far worse.
- _delirium 16y ago
  Is the fund-lifecycle position of a potential VC something founders usually know about and take into account in funding rounds? I don't think I've ever seen it discussed in the checklists of what to watch out for when taking VC funding.
  - hga 16y ago
    It's perhaps not in the checklists since the current low returns for the last ten years bad results for the industry is a new thing (at least in recent memory).
  - staunch 16y ago
    VCs will tell you how much they've invested and where they are in their fund. They also often have more than one fund going at a time.
moolave 16y ago
Taken from a previous entry, this is just one of many reasons why the founders could be given the exit route: they keep majority of the company shares. At a company that is facing unexpected roadbumps, this has to eventually be executed in the hopes of redeeming the company. It's a hard truth, but you can only learn from it.

by grellas 16y ago

hga 16y ago

And the company would have died. The VCs needed a short term 10X or better return on their money due to the fund ending and were willing to bet everything for a chance to get it since "shares in an illiquid company are useless to the VC". Profitable enough to return 2X the VCs' money and growing at "double digit rates", just not enough. The 5 to 10 year lifetime of current VC funds coupled with the slow (at best) economy and the much greater difficultly in cashing out post the doc.com crash suggests that taking VC money today is particularly risky and taking it near the end of the fund's life far worse.

_delirium 16y ago
Is the fund-lifecycle position of a potential VC something founders usually know about and take into account in funding rounds? I don't think I've ever seen it discussed in the checklists of what to watch out for when taking VC funding.
- hga 16y ago
  It's perhaps not in the checklists since the current low returns for the last ten years bad results for the industry is a new thing (at least in recent memory).
- staunch 16y ago
  VCs will tell you how much they've invested and where they are in their fund. They also often have more than one fund going at a time.

moolave 16y ago

Taken from a previous entry, this is just one of many reasons why the founders could be given the exit route: they keep majority of the company shares. At a company that is facing unexpected roadbumps, this has to eventually be executed in the hopes of redeeming the company. It's a hard truth, but you can only learn from it.