3 ms·

If I sell my company for $1T, but I financed $999B of it, should I expect to get a payout? Financing generally requires interest. Seems like the headline is try

If I sell my company for $1T, but I financed $999B of it, should I expect to get a payout? Financing generally requires interest. Seems like the headline is trying to invoke outrage.

sb8244 3y ago
What if you raised 500B and still got nothing? That can happen with 2x or 3x liquidation preference. IDK FanDuel structure (not in article), but they only raised ~ 400M. Yet the investors got every dime up to 550+M.
- jojobas 3y ago
  Nobody forces you to sign away these preferences and participation. It might be a reasonable reflection of your pre-money worth (i.e. near zero) or it might not be.
- giantg2 3y ago
  From an investor standpoint, if I were risking that much momey on a high risk venture, I would want that kind of return to make it worth while and cover the others that don't make it.
  - sb8244 3y ago
    That's the name of the game. 1x non participating is a fine way to offset some risk. Anything more than that is greed.
  - dukeyukey 3y ago
    From a founder/early employee perspective, if I were risking that much _literal lifespan_ on a high-rish venture, I'd want some kind of return to make it worthwhile.
    - giantg2 3y ago
      You mean like a salary and benefits?
dheera 3y ago
Except we're talking about 100% and 200% interest rates, if you read the article. We're talking a $1G company financing $333M and getting nothing.
- giantg2 3y ago
  "Except we're talking about 100% and 200% interest rates, if you read the article." I did read the article. I even went back a looked again. I see no mention of interest rate for the FanDuel deal. "company financing $333M" So if you're saying they financed this amount, there's no way they're subject to 100% interest if the investors get up to approximately $550M. Not to mention this investment timeframe covers years. I don't have the timeframe. What was the actual rate of return? I'm guessing low to mid single digits. Why would an investor put money into something so high risk for so little money when they could just put it in safer assets with higher return? It sounds like you're angry they got nothing because you're only looking at it from the founder perspective. They agreed to the terms.
aledalgrande 3y ago
Gotta do it the Adam Neumann way...
- rrr_oh_man 3y ago
  Can you elaborate?

If I sell my company for $1T, but I financed $999B of it, should I expect to get a payout? Financing generally requires interest. Seems like the headline is trying to invoke outrage.

sb8244 3y ago

What if you raised 500B and still got nothing? That can happen with 2x or 3x liquidation preference. IDK FanDuel structure (not in article), but they only raised ~ 400M. Yet the investors got every dime up to 550+M.

jojobas 3y ago
Nobody forces you to sign away these preferences and participation. It might be a reasonable reflection of your pre-money worth (i.e. near zero) or it might not be.
giantg2 3y ago
From an investor standpoint, if I were risking that much momey on a high risk venture, I would want that kind of return to make it worth while and cover the others that don't make it.
- sb8244 3y ago
  That's the name of the game. 1x non participating is a fine way to offset some risk. Anything more than that is greed.
- dukeyukey 3y ago
  From a founder/early employee perspective, if I were risking that much _literal lifespan_ on a high-rish venture, I'd want some kind of return to make it worthwhile.
  - giantg2 3y ago
    You mean like a salary and benefits?

dheera 3y ago

Except we're talking about 100% and 200% interest rates, if you read the article. We're talking a $1G company financing $333M and getting nothing.

giantg2 3y ago
"Except we're talking about 100% and 200% interest rates, if you read the article." I did read the article. I even went back a looked again. I see no mention of interest rate for the FanDuel deal. "company financing $333M" So if you're saying they financed this amount, there's no way they're subject to 100% interest if the investors get up to approximately $550M. Not to mention this investment timeframe covers years. I don't have the timeframe. What was the actual rate of return? I'm guessing low to mid single digits. Why would an investor put money into something so high risk for so little money when they could just put it in safer assets with higher return? It sounds like you're angry they got nothing because you're only looking at it from the founder perspective. They agreed to the terms.

aledalgrande 3y ago

Gotta do it the Adam Neumann way...

rrr_oh_man 3y ago
Can you elaborate?