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> Founders should approach every fundraising as an auction. I agree. So what's the auction marketplace of startup fundraising - a place where every deal can be

by Liron 6y ago

> Founders should approach every fundraising as an auction. I agree. So what's the auction marketplace of startup fundraising - a place where every deal can be posted publicly, or as close to that as possible?

akharris 6y ago
Demo Day does this for YC companies. Angel List does it, to some extent. Other than that, it doesn't exist. Got some thoughts on this part of the dynamic in the works.
borski 6y ago
This, while seemingly a natural extension, is a bad idea, imho. Investing in startups is inherently one of the riskiest investments you can make, and having deals be public is a problem, as 'normal' investors will be swayed by charismatic founders into losing their homes. That said, 'auctions' for accredited investors already exist, if the company choose to take advantage of it. There are seed funding sites as well as AngelList, etc., to publicize deals. Some founders also choose not to publicize a raise (except among the VC/angel networks) so as to remain under the radar until they are ready to launch.
- guntars 6y ago
  > 'normal' investors will be swayed by charismatic founders into losing their homes. You mean their second or third homes, right? There's a minimum net-worth requirement before you're able to invest in a startup so a failed investment is not going to bankrupt any investors. The founders are much more likely to end up in the poorhouse if things don't work out than investors are.
  - borski 6y ago
    You missed my point; I specifically mentioned accredited investors vs 'normal' investors. I agree with you; it is a good thing that there are accreditation requirements to invest in as risky an investment as a startup. Getting rid of that would be an awful idea. That was the point of my comment.
drewrv 6y ago
Carta is building a private exchange, and their CEO alluded to the possibility of using it to raise money in his blog post announcing the trial run. https://henrysward.medium.com/finally-a-private-stock-exchange-cartax-3c658f30ac97 https://henrysward.medium.com/finally-a-private-stock-exchan... Once we have a liquid and active market for our shares, (in our case we have enough liquidity to support ~ $100M of volume per quarter), when we want to raise primary capital we simply sell common shares out of treasury. This is powerful for a couple of reasons. First, we get better price discovery on CartaX than going door-to-door on Sand Hill Road. Second, all shares bought on CartaX are common stock. There is no preferred stock, board seat, or covenants to deal with in a primary. But perhaps most importantly, CEOs and CFOs don’t have to spend months raising money, doing roadshows, meeting with investors, and negotiating termsheets.
spelunker 6y ago
Or hey, let's just go full circle to the biggest public market out there and direct list on NYSE!

by Liron 6y ago

akharris 6y ago

Demo Day does this for YC companies. Angel List does it, to some extent. Other than that, it doesn't exist. Got some thoughts on this part of the dynamic in the works.

borski 6y ago

This, while seemingly a natural extension, is a bad idea, imho. Investing in startups is inherently one of the riskiest investments you can make, and having deals be public is a problem, as 'normal' investors will be swayed by charismatic founders into losing their homes. That said, 'auctions' for accredited investors already exist, if the company choose to take advantage of it. There are seed funding sites as well as AngelList, etc., to publicize deals. Some founders also choose not to publicize a raise (except among the VC/angel networks) so as to remain under the radar until they are ready to launch.

guntars 6y ago
> 'normal' investors will be swayed by charismatic founders into losing their homes. You mean their second or third homes, right? There's a minimum net-worth requirement before you're able to invest in a startup so a failed investment is not going to bankrupt any investors. The founders are much more likely to end up in the poorhouse if things don't work out than investors are.
- borski 6y ago
  You missed my point; I specifically mentioned accredited investors vs 'normal' investors. I agree with you; it is a good thing that there are accreditation requirements to invest in as risky an investment as a startup. Getting rid of that would be an awful idea. That was the point of my comment.

drewrv 6y ago

Carta is building a private exchange, and their CEO alluded to the possibility of using it to raise money in his blog post announcing the trial run. https://henrysward.medium.com/finally-a-private-stock-exchange-cartax-3c658f30ac97 https://henrysward.medium.com/finally-a-private-stock-exchan... Once we have a liquid and active market for our shares, (in our case we have enough liquidity to support ~ $100M of volume per quarter), when we want to raise primary capital we simply sell common shares out of treasury. This is powerful for a couple of reasons. First, we get better price discovery on CartaX than going door-to-door on Sand Hill Road. Second, all shares bought on CartaX are common stock. There is no preferred stock, board seat, or covenants to deal with in a primary. But perhaps most importantly, CEOs and CFOs don’t have to spend months raising money, doing roadshows, meeting with investors, and negotiating termsheets.

spelunker 6y ago

Or hey, let's just go full circle to the biggest public market out there and direct list on NYSE!