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No, we can call it the result of negotiation between companies and investors. It's not at all uncommon for investors to use a liquidation preference as a negoti

by cal5k 9y ago

No, we can call it the result of negotiation between companies and investors. It's not at all uncommon for investors to use a liquidation preference as a negotiating point to counter founders' demands for a higher valuation.

frgtpsswrdlame 9y ago
That's the point of the article! What do those negotiations do? >The tools used to negotiate a higher share price with investors often come at the expense of employees and early shareholders, sometimes drastically reducing the actual value of their stock. Come on, it's corruption. It's people at the top playing numbers games so they can make a lot of money while basically defauding all the people at the bottom who should also stand to make a lot of money.
- cal5k 9y ago
  The negotiations allow founders and investors to arrive at an agreeable set of terms by which investors put money into the business. You have a very strange view of venture capital.
  - frgtpsswrdlame 9y ago
    >The negotiations allow founders and investors to arrive at an agreeable set of terms by which investors put money into the business. You're ignoring everybody who's not a founder or investor. There are people with stakes in this process who aren't founders or investors who are important too you know. >You have a very strange view of venture capital. In today's climate I definitely do.
    - vkou 9y ago
      > You're ignoring everybody who's not a founder or investor. There are people with stakes in this process who aren't founders or investors who are important too you know. You mean the employees? Sucks to be them.
      - cal5k 9y ago
        Why does it suck to be them? If all goes well their options will be worth something. If it doesn't they'll have no value - that's how equity works. If you want guaranteed, predictable outcomes, negotiate for a higher salary in lieu of equity or go work for a company that isn't on the VC rocket ship. The founders are also taking a huge risk by taking on a liquidation preference >1x... if everything doesn't go well they could be completely wiped out or substantially diluted, as was the case with Blue Apron.
  - notfromhere 9y ago
    'agreeable set of terms' that is to the detriment of small shareholders.

by cal5k 9y ago

frgtpsswrdlame 9y ago

That's the point of the article! What do those negotiations do? >The tools used to negotiate a higher share price with investors often come at the expense of employees and early shareholders, sometimes drastically reducing the actual value of their stock. Come on, it's corruption. It's people at the top playing numbers games so they can make a lot of money while basically defauding all the people at the bottom who should also stand to make a lot of money.

cal5k 9y ago
The negotiations allow founders and investors to arrive at an agreeable set of terms by which investors put money into the business. You have a very strange view of venture capital.
- frgtpsswrdlame 9y ago
  >The negotiations allow founders and investors to arrive at an agreeable set of terms by which investors put money into the business. You're ignoring everybody who's not a founder or investor. There are people with stakes in this process who aren't founders or investors who are important too you know. >You have a very strange view of venture capital. In today's climate I definitely do.
  - vkou 9y ago
    > You're ignoring everybody who's not a founder or investor. There are people with stakes in this process who aren't founders or investors who are important too you know. You mean the employees? Sucks to be them.
    - cal5k 9y ago
      Why does it suck to be them? If all goes well their options will be worth something. If it doesn't they'll have no value - that's how equity works. If you want guaranteed, predictable outcomes, negotiate for a higher salary in lieu of equity or go work for a company that isn't on the VC rocket ship. The founders are also taking a huge risk by taking on a liquidation preference >1x... if everything doesn't go well they could be completely wiped out or substantially diluted, as was the case with Blue Apron.
- notfromhere 9y ago
  'agreeable set of terms' that is to the detriment of small shareholders.