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It kind of screws over everyone except yourself though. VCs gave you money for a VC business, you get to turn it into a "lifestyle business" with no or little
by ZephyrBlu 3y ago
It kind of screws over everyone except yourself though.
VCs gave you money for a VC business, you get to turn it into a "lifestyle business" with no or little obligation to them anymore.
Your employees joined what they thought was a growing startup, then you lay them off after they built the product because there's no need for them anymore since you're not trying for hypergrowth.
Kinda shitty all round except for you.
- twelve40 3y agoWhat's worse, it might provide other incentives. If you know that you can always negotiate a soft landing, you're not as maniacally driven towards that unicorn status, which is required to make VC economics work.
- nextaccountic 3y agoDo you think that closing the business and distributing exactly $0 in assets is a preferable outcome? Because that's what happens for most startups.
- ZephyrBlu 3y agoI don't understand the point you're trying to make here.
- nextaccountic 3y agoFailing a VC-funded startup is an expected outcome (statistically). What difference does it make whether the founder ended with nothing (the typical scenario) vs. a lifestyle business? VCs get nothing either way. VCs aren't screwed because they already accounted for the risk of failure. That's kind of their job.
- HWR_14 3y agoIncentive alignment. Target smashes damaged goods instead of selling them at a discount so employees or customers don't purposefully cosmetically damage things they want to buy. If the failure state of a business is "the founder can buy it for pennies and try to make something of it", then why wouldn't all lifestyle businesses pitch themselves as VC-backed growth businesses and then use up all that money and settle as a lifestyle business?