2 ms·

I think you should not, because you're trading time which is your most valuable asset, and (statistically) you're not good at picking the right startup (read it

I think you should not, because you're trading time which is your most valuable asset, and (statistically) you're not good at picking the right startup (read it as "you're not guaranteed to be good", I don't want to say that you're necessarily bad). To elaborate. An angel investor has a lot of money, say a spare $200k, so she can invest $20k in 10 startups. If one of these does 20x in, say, 5-10 years, she doubled the money which is good. You, instead, will only bet on one startup. From a purely monetary perspective, you shouldn't go too early stage to increase your prob of success. At that point, might as well work for a late-stage startup that offers cash + equity. In your situation, I'd find a cofounder and a project, that can either become a startup, or even just grow to a passive source of income. If you arrive to a good amount of money, then you can think investing. If you decide to go for it anyway, from a legal point of view I don't think you need anything. The easiest thing is that you'll become an advisor for a small percentage (I assume of very cheap stock options). Keep in mind that it will take several years before you these options may become stocks (company goes public) and there are many ways for the company to silently cut you out of the pie if they sell or exit in any other way.

mars4rp 9y ago
My plan is not to invest all of my time in 1 startup, I was thinking of doing 2 or 3 a year, I don't want to build their whole product! In 5 years I am going to have a portfolio of 10 to 15 startups, if one or two do 20x, I would collect all of my money plus nice return! And it is much more fun than to work 70 hours a week for a company for 5 years! Legally what is the best way to reduce a chance of being cut of in sell or exit?
- ecesena 9y ago
  Ok, sorry that wasn't 100% clear to me, but in this case it makes sense. To the best of my knowledge you have no legal solution -- that's probably where investors may give you good advice. But if the founders decide to close down and go work for another company, there's no liquidation event. This said, we go back to the 1:20, if your plan is to invest in many, then you should be good.

mars4rp 9y ago

My plan is not to invest all of my time in 1 startup, I was thinking of doing 2 or 3 a year, I don't want to build their whole product! In 5 years I am going to have a portfolio of 10 to 15 startups, if one or two do 20x, I would collect all of my money plus nice return! And it is much more fun than to work 70 hours a week for a company for 5 years! Legally what is the best way to reduce a chance of being cut of in sell or exit?

ecesena 9y ago
Ok, sorry that wasn't 100% clear to me, but in this case it makes sense. To the best of my knowledge you have no legal solution -- that's probably where investors may give you good advice. But if the founders decide to close down and go work for another company, there's no liquidation event. This said, we go back to the 1:20, if your plan is to invest in many, then you should be good.