4 ms·

Forgive my shear ignorance, but why would two original co-founders who are no longer active holding 0.5% each scare off investors and such?

• macspoofing 14y ago
  They wouldn't. The active founders were greedy.
  • talsraviv 14y ago
    Also sort of true. @bretpiatt nailed the administrative side, but @macspoofing you are right in that we also wanted to free up equity to attract talent. It made more sense that the first equity to be set aside for employees shouldn't dilute active founders and investors if possible.
    • macspoofing 14y ago
      >It made more sense that the first equity to be set aside for employees shouldn't dilute active founders and investors if possible. It doesn't dilute investors. It dilutes you. I'm not as understanding of your motives as others may be. You're lucky the other founders were really cool. The reality is that Ariel and Anton took on risk by being in the startup originally, and presumably put in a lot of work and effort towards your company - so it's completely fair and reasonable that they have something to show for it - no? Whether or not the current product looks like the original is immaterial.
• bretpiatt 14y ago
  Each additional major shareholder is a required signature on documents, it is a question that has to be asked, "Why aren't they with you any longer?" For 'the next Facebook' investors aren't going to care if they're able to put money in at a valuation they like. For a more marginal investment the extra time to look through stuff like that may shut the deal down. To compare, think of it like a personal resume. If you're a developer applying for a development role but you took two years out of the last five to go teach English to kids in an emerging market nation where you coded on the side (and could show Github / other public repos) anyone taking the time would commend you for the activity. Someone rushing through reviewing resumes may toss yours on the floor.
  • macspoofing 14y ago
    >Each additional major shareholder is a required signature on documents ... You can structure your corporation in many ways. If the old co-founders were cool enough to give up their shares, they would be cool enough to, say, give the current founders proxy rights. >"Why aren't they with you any longer?" It's a 3 second answer if it actually comes up (and it wouldn't). Lots start-ups have "lingering" shareholders/founders who may or may not be part of the company. It just isn't a big deal.
    • Lewton 14y ago
      >You can structure your corporation in many ways. If the old co-founders were cool enough to give up their shares, they would be cool enough to, say, give the current founders proxy rights. A possibility, but certainly this is much simpler?
  • amorphid 14y ago
    I recently sold my startup. Oh yeah! The deal was much harder than I expected because the deal's tems required me to get 100% of shareholders to agree to the buyout. Those shares I issued early all on in my startup's life felt like serious baggage towards the end. The deal had a deadline, and one guy didn't decide to sell until 6:00 a.m. of the day the deal was set to expire. It was stressful to say the least.
    • joegaudet 14y ago
      This is why you usually work in a drag-a-long clause in your shareholders agreement, ours for instance requires everyone to sell if more than some percentage of the shareholders agree. It prevents a minority shareholder from holding up or killing a deal.
      • amorphid 14y ago
        Good idea. I'll try to remember tyat the next time I get shareholders.
  • 14y ago