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This is completely, 100%, wrong about how YC thinks about things. If you've not advised a large number of fledgling startups, you wouldn't know, but really tru
by emmett 12y ago
This is completely, 100%, wrong about how YC thinks about things.
If you've not advised a large number of fledgling startups, you wouldn't know, but really truly talking to corpdev is demoralizing and dangerous. If they really want you they'll reach out with an dollar figure (albiet probably a low one). If they haven't done that, they aren't serious. Don't waste your time.
If actually you've raised from a VC, a small acquisition means you'll not clear preferences, which means you get nothing other than retention. The VC/founder conflict only comes up when you have a medium successful company that could be really successful. But in that case you can almost certainly sell secondary stock, lock in your $1 million today, and still go for it.
But more than that, YC (and Paul) truly want to support the founders whatever they want. We celebrate the small sales as well as the big ones. It's simply not true this is selfish advise that you should disregard.
- droopyEyelids 12y agoDo you think YC represents the general VC industry?
- lifeisstillgood 12y agoIt's probably fair to say YC represents best practise in the VC industry and so any startup with options would be able to use them as a marker against which to persuade the general industry to improve.
- lifeisstillgood 12y agoCan I just clarify, the selling of secondary stock and locking in a million, is that actually having cash in the founders personal bank account, or is that some cash on some future funding event? I seem to remember this as a discussion some years ago - where YC was set against the "keep them hungry" mentality. I am assuming it has not changed?
- emmett 12y agoSecondary stock sales means the founder sells a portion of their stock in the company in exchange for cash today. There used to be a widespread belief in the VC world that you wanted to prevent founders from seeing any cash until the ultimate exit. As negotiating leverage has shifted towards founders this has gone away. It's stupid anyway, since allowing founders to see a little cash up front actually aligns incentives much better once the company is somewhat successful.
- lifeisstillgood 12y agoThank you.
- simonw 12y agoFounders who have a successful company but aren't personally well-off are much more likely to sell early rather than pushing on to create a super-valuable company.