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So true. Many first-time founders do not understand the implications of this. If you take money from Sequoia, and after years of hard work, you get an offer fo

So true. Many first-time founders do not understand the implications of this. If you take money from Sequoia, and after years of hard work, you get an offer for an acquisition for $100M, which will make you, the founder, $10M in your pocket, set for life... would you take it, or would you rather risk it all, for a 10% chance to get to a $1B acquisition? I know that when I ask young founders, they'll casually say they'll go for the $1B. I strongly suggest you think slow and hard about this. Because some VCs will not give you a choice, and a 90% chance of making nothing from years of hard work is not fun.

pbreit 12y ago
That's why it's humorous to see the same people criticizing founder/employee cashouts.
pwang 12y ago
Yep, agree. I think more people faced with this question should see it posed as "90% chance of no return". (Cognitive irrationalities about asymmetric loss aversion and all that.)
netcan 12y ago
I don't think it's quite as grim as that. A founder that has taken a business to $100M with a credible chance at another 10X growth period is now CEO of a substantial company. Companies of that size rarely just blow up with all equity becoming worthless. Salaries, bonuses or even equity sale can put some lump some in the founder's pockets. It certainly can turn out better to take the early money, but it's not necessarily risking it all.