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It's absolutely astonishing to me that SV investors and incubators pass along ~4 million USD to a team of people with so little business experience, as to negle
by MortenK 12y ago
It's absolutely astonishing to me that SV investors and incubators pass along ~4 million USD to a team of people with so little business experience, as to neglect hiring an accountant. End result being unpaid payroll tax for almost 3 full years!
No one ever asked what accounting firm Amicus used? No one ever just glanced at the finances and thought hey, where's the frigging payroll tax? Is valley capital so readily available as to warrant this kind of extremely low investor engagement in funded companies?
No written founders agreement either. I mean this is basics, and it should have been caught or taught by the accelerators and the investors.
This is not a shot at the OP, who I think is exceedingly brave to write such a public, honest and informative account of their screw-ups. Competence comes from experience and everybody in business has been incompetent at some point.
Rather, this is a massive failure on the investors' and accelerators part. With all the talk of "funding the team, not the idea", you'd think there was a bit deeper understanding of team experience and competence, than just some degrees from an ivy.
It's mind blowing that investors can be so careless with their cash. I wonder if it's a common occurrence or if this is an outlier situation.
- 7Figures2Commas 12y ago> It's mind blowing that investors can be so careless with their cash. I wonder if it's a common occurrence or if this is an outlier situation. There is way too much capital chasing too few opportunities today. The bar for who and what gets funded at seed stage is extremely low. Social proof and accelerator cred clearly often substitute for due diligence. Exacerbating this is the prevalence of party rounds in which lots of investors put in relatively small chunks of capital. For obvious reasons, if you're raising a $6 million Series A from two or three name firms on Sand Hill Road, you're probably going to be subjected to a lot more scrutiny than if you're raising a $3 million round from a group that consists of upwards of 10 angels and/or super angel funds. In the latter scenario, the amount invested per investor tends to be so small that none of the participants have a real incentive to perform rigorous due diligence, which costs money and takes time. According to CB, 15 investors participated in Amicus' $3.2 million round in 2012.
- aidos 12y agoAdditionally, accountants can save you huge amounts of money in the long run. We pay our accountant a very modest £100 a month, and he's easily saved us many multiples of that again and again. If you're ever thinking that you can't afford an accountant you may want to think again.
- argonaut 12y agoIt's not astonishing to me at all. Look at Amicus now. 1) They're still around, and 2) it seems they have actual paying customers now (in a scaleable market). That is farther than 95% of startups.