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If, for your first round, you end up with 10 individual investors each forking 25k, you'll end up with board management issues. 1 with 100k, 2 with 50, 4 with
by karambahh 11y ago
If, for your first round, you end up with 10 individual investors each forking 25k, you'll end up with board management issues.
1 with 100k, 2 with 50, 4 with 12.5 : yeah, why not.
With that, you have one clear lead, with whom future investors and bank can relate to.
My bank wouldn't have bankrolled us if we had 10 "small" investors from the start.
[This said, I'm no expert on the subject, just anecdotal evidence...]
- pbreit 11y agoNone of those investors would get a board seat. Yes, your breakdown is both preferable and more likely. But my point stands.
- karambahh 11y agoYour point stands, however, I didn't mean "board" management literally. I should have said "shareholders management". I'm not entirely familiar with US corporate law, but on roman based civil law, 10 investors with 25K of seed capital (ie non trivial amount of % votes) can get messy. (although we did create a board with the breakdown I suggested, because we were lucky to pick the "right" FoaF investors, attorneys and counsels)
- URSpider94 11y agoUnder U.S. corporation law, shareholders have very little ability to affect corporate management, unless they own a large enough stake to impact board elections. In a start-up valued at $1MM post-money, these 10 angels are not going to own more than a couple percent each, while the founders will control 75 percent of the company. The founders will have more than enough voting control, assuming they vote together, to ignore the investors.
- pbreit 11y agoHe might be talking about Canadian law which I would admit can be goofy with respect to startups. But I still don't think it's that big a deal.