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This is why i am wondering: why are the very early stage investors giving money in bulk vs feeding the startup some amount every week as long as they all agree

This is why i am wondering: why are the very early stage investors giving money in bulk vs feeding the startup some amount every week as long as they all agree it makes sense to keep going?

rdlecler1 9y ago
Because the founder would be spending all of their time reselling the investors every week. I don’t want an entrepreneur spending their weekends looking for jobs on LinkedIn because they had a bad week. You need patient capital to build and iterate to PMF.
- anovikov 9y ago
  That's interesting, so you see convincing someone paying say $10,000 a week as long as he sees progress as good, slowly exchanging it for stock at a set valuation, as harder than shelling out $2M out of the pocket in one bulk amount? I have experience of the former (well, it was more like $5K in my case) and it wasn't hard at all, i struggle to imagine myself raising $1M at once. $5K a week sounds like too little, but as far as hiring coders go, as i am in East Europe, it's like $10K in West Europe or $20K in the Valley, not insignificant. Maybe that's just shyness/psychological barrier? I struggle to imagine myself saying someone 'give me a million bucks and we'll build this cool thing and get rich', but asking for 'decent salaries for these good guys and myself, so we don't have to go to Upwork, plus covering our AWS costs' is whole lot easier for me, and it works.
  - rdlecler1 9y ago
    Yes, terrible idea. I wouldn’t back a startup under those conditions. And what if there are multiple investors? Now you have to be schmoozing them up all the time. As an investor you make a bet on a team to execute. If you’re not comfortable making that kind of bet then maybe you shouldnt be backing a team that you only trust with one month of runway. I can tell you, that you’d be the last investor that an entrepreneur would go to for funding — which would mean that you get the worst deals.
gnode 9y ago
Investment in a company is traded for power over that company (ownership of shares). It's not so much giving money in bulk, as it is paying for your share of control and reward in the company. If a majority of the controlling ownership of a company decide to liquidate the company, then they can do that, and get back what remains of their investment. There is not usually any right to get your money back as a minority shareholder, as this retraction of your commitment would be damaging to the interests of the other shareholders.

This is why i am wondering: why are the very early stage investors giving money in bulk vs feeding the startup some amount every week as long as they all agree it makes sense to keep going?

rdlecler1 9y ago

Because the founder would be spending all of their time reselling the investors every week. I don’t want an entrepreneur spending their weekends looking for jobs on LinkedIn because they had a bad week. You need patient capital to build and iterate to PMF.

anovikov 9y ago
That's interesting, so you see convincing someone paying say $10,000 a week as long as he sees progress as good, slowly exchanging it for stock at a set valuation, as harder than shelling out $2M out of the pocket in one bulk amount? I have experience of the former (well, it was more like $5K in my case) and it wasn't hard at all, i struggle to imagine myself raising $1M at once. $5K a week sounds like too little, but as far as hiring coders go, as i am in East Europe, it's like $10K in West Europe or $20K in the Valley, not insignificant. Maybe that's just shyness/psychological barrier? I struggle to imagine myself saying someone 'give me a million bucks and we'll build this cool thing and get rich', but asking for 'decent salaries for these good guys and myself, so we don't have to go to Upwork, plus covering our AWS costs' is whole lot easier for me, and it works.
- rdlecler1 9y ago
  Yes, terrible idea. I wouldn’t back a startup under those conditions. And what if there are multiple investors? Now you have to be schmoozing them up all the time. As an investor you make a bet on a team to execute. If you’re not comfortable making that kind of bet then maybe you shouldnt be backing a team that you only trust with one month of runway. I can tell you, that you’d be the last investor that an entrepreneur would go to for funding — which would mean that you get the worst deals.

gnode 9y ago

Investment in a company is traded for power over that company (ownership of shares). It's not so much giving money in bulk, as it is paying for your share of control and reward in the company. If a majority of the controlling ownership of a company decide to liquidate the company, then they can do that, and get back what remains of their investment. There is not usually any right to get your money back as a minority shareholder, as this retraction of your commitment would be damaging to the interests of the other shareholders.