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I've seen firsthand how PE ruins startups. I joined a seed co and our founder went with a PE firm rather than a VC for our next round. The VCs were upfront abou

I've seen firsthand how PE ruins startups. I joined a seed co and our founder went with a PE firm rather than a VC for our next round. The VCs were upfront about job cuts but the PE investors did not say anything until they took over. Needless to say, the founder got a good paycheck but we were left holding the bag. It was a bloodbath and they completely ruined the culture, product, morale, and any semblance of growth. It was personally the most stressful period of my working life... From then on, the moment that I see private equity mentioned anywhere, I know its time to run.

jimnotgym 2y ago
Isn't venture capital merely a kind of private equity?
- toomuchtodo 2y ago
  VC is musical chairs waiting for the greater fool to come along. Still good times. PE is the chop shop, there is no greater fool left except the customers and the employees. End of the road.
23david 2y ago
It sounds unusual for a seed-stage company (I assume that’s what you mean) to seek funding from private equity. Did the company already have significant revenue and profitability? Why did the founder go for private equity rather than VC.. was the founder basically looking to sell/exit at that point?
- throwaway9010 2y ago
  Yeah exactly - it was essentially at the revenue of series B or C at that point. This is in 2021 during the height of ZIRP, so I assume part of it was frothiness but the aftermath was terrible.
RajT88 2y ago
A company I worked at got bought by private equity. The sales started to slump for the product I worked with, and they decided to make up for it by raising prices. They figured they would make more money than they lost by alienating customers. The other thing they did was drastically ramp up license compliance shakedowns (one of the shadiest practices I have seen in the industry). The product and company are still around because bits got sliced up, spun off or sold off. PE no longer has its tendrils in it, although I am not sure who does now.

jimnotgym 2y ago

Isn't venture capital merely a kind of private equity?

toomuchtodo 2y ago
VC is musical chairs waiting for the greater fool to come along. Still good times. PE is the chop shop, there is no greater fool left except the customers and the employees. End of the road.

23david 2y ago

It sounds unusual for a seed-stage company (I assume that’s what you mean) to seek funding from private equity. Did the company already have significant revenue and profitability? Why did the founder go for private equity rather than VC.. was the founder basically looking to sell/exit at that point?

throwaway9010 2y ago
Yeah exactly - it was essentially at the revenue of series B or C at that point. This is in 2021 during the height of ZIRP, so I assume part of it was frothiness but the aftermath was terrible.

RajT88 2y ago

A company I worked at got bought by private equity. The sales started to slump for the product I worked with, and they decided to make up for it by raising prices. They figured they would make more money than they lost by alienating customers. The other thing they did was drastically ramp up license compliance shakedowns (one of the shadiest practices I have seen in the industry). The product and company are still around because bits got sliced up, spun off or sold off. PE no longer has its tendrils in it, although I am not sure who does now.