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Don't some people take VC as a way to get a sudden large influx of cash to the founders. That is, if my company is profitable and making okay money, but not eno
by HWR_14 5y ago
Don't some people take VC as a way to get a sudden large influx of cash to the founders. That is, if my company is profitable and making okay money, but not enough for me to afford some nice toys now, don't some people take VC so they give up equity now for money now? Knowing that the money may turn out to have a 100,000% interest rate?
- reitanqild 5y agoI think VCs will be disappointed or worse if they learn this was the main plan. (Of course FU money is another thing and something many VCs approve of. Edit: since it seems to me this is a rather uncommon term these days it refers to giving the founder the initial investment and then a healthy amount extra in payout so their decisions won't be clouded anymore with the fact that they wan't "their" money back. At least that is the theory.)
- HWR_14 5y agoOh, sorry. I didn't mean as an exit plan. I was thinking of the FU money concept. I think there's a similar benefit (from the VC's POV) to some a bit of lifestyle inflation and the ability for the founders to have enough cash to use cash to solve personal problems instead of spending their time. I'm thinking "toys" was a bad word. I'm thinking getting a reliable Tesla as a means of personal transportation, not a yacht.
- 3pt14159 5y agoThis is called "taking some off the table" and there is a place for it, but it is usually a small part of a bigger push to get the company to rocketing growth.