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If you have no capital to bring, then you will have no equity either unless you provide labor for free. Labor compensated with equity is capital, since you hav

If you have no capital to bring, then you will have no equity either unless you provide labor for free. Labor compensated with equity is capital, since you have to pay your living expenses out of savings or loans that you are liable for. And you'll just be an employee of sorts, except with less pay and more risk. Why bother? If you're unsure where your next meal is coming from, then you probably aren't currently a good candidate to be a founder. Maybe later you will be, but first things first: accumulate a bit of wealth. Venture capital isn't a government welfare program. You might get YC or others to pay a sort of a social tax by providing a sort of welfare, but the founders won't be owners (see above).

awillen 6y ago
Yeah, it's commonly known as sweat equity. You do the work, and other people provide the money, then you split up the equity accordingly to the relative value of the two different types of contributions (I mean that's oversimplying but it's generally accurate). If you're unsure where your next meal is coming from, you may still have a great idea and the ability to execute on it. If someone gives you enough money that you have the leeway to do those things, then everyone wins. Obviously venture capital isn't welfare... no one has begun to suggest that it is. VC puts money into companies in exchange for equity because those companies need money. If the companies didn't ever need money, there would be no need for VC. The idea that VC should only fund people who already have plenty of capital available to them fundamentally misunderstands the entire model.
- cryptonector 6y ago
  Obviously VC exists because the founders don't have enough capital, but not because the founders have zero capital.
cactus2093 6y ago
The way YC currently works is something like $125k for 7% equity. So founders can pay themselves enough to live on and still own 93% of their company. This wasn't a hypothetical that the parent comment you're replying to made up. So whatever bizarre first-principles argument you're trying to make, which I am not really following, already doesn't match the current reality.
- cryptonector 6y ago
  $125k is a salary.
hinkley 6y ago
And labor is to be exploited, so you're already put into a different class concerning "what can this person do for me?"

awillen 6y ago

Yeah, it's commonly known as sweat equity. You do the work, and other people provide the money, then you split up the equity accordingly to the relative value of the two different types of contributions (I mean that's oversimplying but it's generally accurate). If you're unsure where your next meal is coming from, you may still have a great idea and the ability to execute on it. If someone gives you enough money that you have the leeway to do those things, then everyone wins. Obviously venture capital isn't welfare... no one has begun to suggest that it is. VC puts money into companies in exchange for equity because those companies need money. If the companies didn't ever need money, there would be no need for VC. The idea that VC should only fund people who already have plenty of capital available to them fundamentally misunderstands the entire model.

cryptonector 6y ago
Obviously VC exists because the founders don't have enough capital, but not because the founders have zero capital.

cactus2093 6y ago

The way YC currently works is something like $125k for 7% equity. So founders can pay themselves enough to live on and still own 93% of their company. This wasn't a hypothetical that the parent comment you're replying to made up. So whatever bizarre first-principles argument you're trying to make, which I am not really following, already doesn't match the current reality.

cryptonector 6y ago
$125k is a salary.

hinkley 6y ago

And labor is to be exploited, so you're already put into a different class concerning "what can this person do for me?"