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There are so many VCs now, and all of them are looking for an edge. There is an obvious edge in building a term-sheet that creates a full ratchet for the emplo

There are so many VCs now, and all of them are looking for an edge. There is an obvious edge in building a term-sheet that creates a full ratchet for the employee stock option plan at 10%, where each employee earns points toward the total based on days worked, and 10-year exercise windows. Then that VC needs to lead rounds and talk constantly about how the employees and companies they fund have the best chance of an equitable exit for all. How if you are not at one of their companies, you will almost definitely be screwed through dilution and bad founder actions. YC took VC from shareholder focus to founder focus. The next YC will balance employee and founder interests in a way that delivers outsized outcomes the way that YC delivered outsized outcomes for shareholders by understanding that the founders were more important than getting an extra 1% or some other BS term in the deal.

throwearlyeng 6y ago
I'm just not sure how someone who is not already able to command lead investor-ship through their reputation and added value would be able to sell such a "short deal" to founders. YC can. Maybe they could demonstrate much more effective recruiting.
- wtvanhest 6y ago
  If you picture a cap table having 3 components 1) Investor's Share 2) Founder's Share 3) Employee's Share Founders try to optimize for their own share, but investors basically destroy the employee share to get founders to agree. I don't believe most founders are sophisticated enough to model employee interests until it is too late. My belief is that a new structure could be sold to founders by being a thought leader. In a world with tons of money and no edge, I believe its worth it for someone to try. But... I'm not a VC, and personally believe its the most difficult gig in investing (which investing is the most difficult gig in any job long-term). So, take anything I say with a massive grain of salt.

throwearlyeng 6y ago

I'm just not sure how someone who is not already able to command lead investor-ship through their reputation and added value would be able to sell such a "short deal" to founders. YC can. Maybe they could demonstrate much more effective recruiting.

wtvanhest 6y ago
If you picture a cap table having 3 components 1) Investor's Share 2) Founder's Share 3) Employee's Share Founders try to optimize for their own share, but investors basically destroy the employee share to get founders to agree. I don't believe most founders are sophisticated enough to model employee interests until it is too late. My belief is that a new structure could be sold to founders by being a thought leader. In a world with tons of money and no edge, I believe its worth it for someone to try. But... I'm not a VC, and personally believe its the most difficult gig in investing (which investing is the most difficult gig in any job long-term). So, take anything I say with a massive grain of salt.