5 ms·
Very. It's usually not this egregious though. Founders might want stable finances for their family or the ability to buy a reasonable home, but VCs want them to
by Schnitz 4y ago
Very. It's usually not this egregious though. Founders might want stable finances for their family or the ability to buy a reasonable home, but VCs want them to keep going, so VCs allow founders to cash out some of their equity so that founders don't go for an exit for the sake of their personal finances.
- leet_thow 4y agoMakes sense, thanks.
- kkielhofner 4y agoAgreed but it's never this significant. In the world of "real companies" investors, boards, teams, etc are not OK with providing a founder with "F U money" (which this certainly is) so that they can go on and do nothing, leave for another venture, etc. For the others involved from investors to employees it's never good to be working with someone who could (theoretically) stand up from a meeting and walk out to go on and do whatever they want forever.
- wmf 4y agoI'm reminded of the "Grouponzi" round from 2010. https://venturebeat.com/entrepreneur/groupon-fundraising/ https://venturebeat.com/entrepreneur/groupon-fundraising/
- kkielhofner 4y agoBingo. It could be argued the relative failure of Groupon was largely driven by key stakeholders/insiders cashing out way too big way too early.
- dmitryminkovsky 4y agoThanks for this. Love the end: > And this stealth IPO has one more advantage: There’s nothing preventing Groupon from doing a real IPO in 2011. If anything, the reassuring cash pile makes it a more attractive investment.
- deleted 4y ago[deleted]