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A popular venture studio based out of NYC is like this. They take 60% of the equity from the start, and provide 1M in capital (which is decent amount). The narr

A popular venture studio based out of NYC is like this. They take 60% of the equity from the start, and provide 1M in capital (which is decent amount). The narrative is that they provide significant guidance, follow on capital, etc. But in reality, none of their guidance or follow on capital comes through. For a first time founder its okay for a year, any longer and its really a financial disaster versus just working your way up the corporate ladder. People have no idea how few startups really cash out, and how hard it is when you start from low equity percentages/have bad terms. The horror stories usually dont arise until a startup is actually worth something and has a future. This is usually 2 years+ into the journey. I think the typical founders doing this are actually just people that want to say they own a company at dinner parties.

CharlieDigital 2y ago
> A popular venture studio based out of NYC is like this Sounds like Fractal. Supposedly, the value add is that they've already done the due diligence and market research on some product idea. They match a team (CEO + CTO) to the idea and provide the funding. Do not know of any well known companies to have come out of this model, but if they're still around, it must be generating some returns for it to be worthwhile.
- presidentender 2y ago
  Fractal seems to have addressed the entire market they had identified. It doesn't appear that they're still recruiting founders. I was in their pipeline and interviewing potential business cofounders, but chose to go the traditional venture route - it didn't work out, but I don't think I'd have succeeded at the Fractal business either.
  - ldjkfkdsjnv 2y ago
    They stopped getting funded bc of a mix of interest rates and company underperformance
paxys 2y ago
At that point they are just hiring an employee. Once you get the $1M what incentive is there to continue to hustle while being a minority shareholder in your own company?
- s1artibartfast 2y ago
  Yeah, what's the vc ROI here if they drop 1M and destroy each company. Do some of these go on to exit?

CharlieDigital 2y ago

> A popular venture studio based out of NYC is like this Sounds like Fractal. Supposedly, the value add is that they've already done the due diligence and market research on some product idea. They match a team (CEO + CTO) to the idea and provide the funding. Do not know of any well known companies to have come out of this model, but if they're still around, it must be generating some returns for it to be worthwhile.

presidentender 2y ago
Fractal seems to have addressed the entire market they had identified. It doesn't appear that they're still recruiting founders. I was in their pipeline and interviewing potential business cofounders, but chose to go the traditional venture route - it didn't work out, but I don't think I'd have succeeded at the Fractal business either.
- ldjkfkdsjnv 2y ago
  They stopped getting funded bc of a mix of interest rates and company underperformance

paxys 2y ago

At that point they are just hiring an employee. Once you get the $1M what incentive is there to continue to hustle while being a minority shareholder in your own company?

s1artibartfast 2y ago
Yeah, what's the vc ROI here if they drop 1M and destroy each company. Do some of these go on to exit?