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Apparently the investment was all or mostly through a SAFE. https://en.m.wikipedia.org/wiki/Simple_agreement_for_future_equity https://en.m.wikipedia.org/wiki/S

Apparently the investment was all or mostly through a SAFE. https://en.m.wikipedia.org/wiki/Simple_agreement_for_future_equity https://en.m.wikipedia.org/wiki/Simple_agreement_for_future_... I only know what's on that Wikipedia page, but it doesn't look like it's as simple as the investor owning a stake, rather there are events that have to be triggered first which were perhaps very unlikely to be triggered.

pedalpete 6y ago
An exit would most likely be a trigger on a SAFE. But then it comes down to what the cap was, and how much the VC would get on their return. I'm wondering if the math worked out that the firm would end up with less than half their investment, it's in their best interest to have a write-off and the founder benefits and potentially comes back to them with a new business later, instead of squeezing the founder for a few dollars.
- cj 6y ago
  Yes, an acquisition would be a trigger. Typicaly there's 1x preference so $800k is paid back to the investors before the pie is split up. The cap for Baremetrics was $10m. They would end up with more than the initial $800k if they wanted it.
  - texasbigdata 6y ago
    Which implies, given the sudden rushed combination of “I’m bad at management” and “please no diligence” and “let’s go fast, 6 weeks”, that he’s lying about some or all of the story. The buyer won’t say anything, the seller won’t say anything, this blog posts remains as the record whether it’s 100% true or 75% true. Let’s take a specific example. General Catalysts 2001 fund is projected to generate a 11.9% annual return per the public disclosure from Calpers. (1, sort for the name). That same fund is shown as a 7.1% net IRR by the state of New Jersey. (2) The PR is soooo good, per some of the comments in this thread, General Catalyst is totally fine eating a bottom quartile return in a risky asset class (VC), which if you believed was their general behavior would prevent them from fundraising (therefore existing) going forward? Please. Maybe the fact pattern is as stated, but it seems fishy at best. https://www.calpers.ca.gov/page/investments/asset-classes/private-equity/pep-fund-performance/fund&id=4 https://www.calpers.ca.gov/page/investments/asset-classes/pr... https://www.state.nj.us/treasury/doinvest/pdf/AlternativeInvestments/PrivateEquity/General_Catalyst_SIC.pdf https://www.state.nj.us/treasury/doinvest/pdf/AlternativeInv...

pedalpete 6y ago

An exit would most likely be a trigger on a SAFE. But then it comes down to what the cap was, and how much the VC would get on their return. I'm wondering if the math worked out that the firm would end up with less than half their investment, it's in their best interest to have a write-off and the founder benefits and potentially comes back to them with a new business later, instead of squeezing the founder for a few dollars.

cj 6y ago
Yes, an acquisition would be a trigger. Typicaly there's 1x preference so $800k is paid back to the investors before the pie is split up. The cap for Baremetrics was $10m. They would end up with more than the initial $800k if they wanted it.
- texasbigdata 6y ago
  Which implies, given the sudden rushed combination of “I’m bad at management” and “please no diligence” and “let’s go fast, 6 weeks”, that he’s lying about some or all of the story. The buyer won’t say anything, the seller won’t say anything, this blog posts remains as the record whether it’s 100% true or 75% true. Let’s take a specific example. General Catalysts 2001 fund is projected to generate a 11.9% annual return per the public disclosure from Calpers. (1, sort for the name). That same fund is shown as a 7.1% net IRR by the state of New Jersey. (2) The PR is soooo good, per some of the comments in this thread, General Catalyst is totally fine eating a bottom quartile return in a risky asset class (VC), which if you believed was their general behavior would prevent them from fundraising (therefore existing) going forward? Please. Maybe the fact pattern is as stated, but it seems fishy at best. https://www.calpers.ca.gov/page/investments/asset-classes/private-equity/pep-fund-performance/fund&id=4 https://www.calpers.ca.gov/page/investments/asset-classes/pr... https://www.state.nj.us/treasury/doinvest/pdf/AlternativeInvestments/PrivateEquity/General_Catalyst_SIC.pdf https://www.state.nj.us/treasury/doinvest/pdf/AlternativeInv...