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> People shouldn't have to work below market rate (or for free, as they often do) to implement their own ideas. I think this is the crux of what you are strugg
by greghinch 13y ago
> People shouldn't have to work below market rate (or for free, as they often do) to implement their own ideas.
I think this is the crux of what you are struggling with. A VC investing in your business is not hiring you as an employee. If you have an idea you want to implement as a business, that's on you. The VC is offering money in return for equity in hopes of generating capital for the fund's investors. The person managing that investment for the fund is paid a salary based on their ability to do that.
Conversely, you as a founder of a business are compensated based on your own success. Taking investment is not an indicator of success. Investment money is to grow the business faster than it could on its own. Revenue, and more importantly profit, are where you see your own success. The large exit for many funded startups is also more commonly heard about success indiactor, because solid monthly margins aren't a) usually reported for private companies and b) don't make very interesting news, where as a big sale usually is/does.
Starting and owning a business is an entirely different world from being an employee, and never should you apply the principles of one to the other.
- michaelochurch 13y agoVC-istan is no longer real entrepreneurship. VC's have set themselves up as between-companies executives who get to dip their fingers in tens of pies. If you don't accept their term sheets, they can't fire you per se, so they'll just fund your competitors and put you out of business.
- greghinch 13y agoThis has not been my experience in recently helping build a startup and seeking VC money (that they are overly exploitive), but perhaps we had more realistic expectations going in. Anecdotal surveying amongst prior founders that came in as mentors during our recent accelerator stay suggested that at a typical $20-50mil exit (an average "successful" tech company sale), "unproven" founders should each expect to have 3-5% in equity remaining. That's after 1-2 seed rounds, and at least A and B rounds. Terms significantly improve for "proven" founders.
- michaelochurch 13y ago3-5%? After Series B? Dude, you got fucking robbed. That's all I'm going to say.
- greghinch 13y agoI'm not there yet. I'm saying that's a typical number I got from founders who exited at that point. Out of curiosity, have you ever gone through the process of building a funded company yourself?