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How much do founders typically get when their startups sell for less than what investors put in? Not a troll question, genuinely interested. Any data on how t
by jonbarker 9y ago
How much do founders typically get when their startups sell for less than what investors put in? Not a troll question, genuinely interested. Any data on how this averages?
- Hydraulix989 9y agoA 1x liquidation preference is a pretty standard term for VCs.
- snowmaker 9y ago$0.
- leelin 9y agoOfficially, founders typically only hold common shares (often with further restrictions). Common shareholders should get $0 when selling for less than money raised because of liquidation preferences. However, the acquiring company usually wants to retain some of the team. The founders often receive an employment offer, and that offer can contain anything negotiated, including signing or performance bonuses. There can be some conflict of interest and negotiation ugliness if the investors view the employment offers as too generous at the expense of shareholders. In practice, most decent investors would prefer to spend their energy on their big winners rather than optimize a small loss into break-even. http://www.paulgraham.com/growth.html#f12n http://www.paulgraham.com/growth.html#f12n