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Yeah, I'm not sure there's really a whole lot we can glean from the purchase of founders' stock here. To an outsider, it feels unfair, but I agree that without
by philipn 11y ago
Yeah, I'm not sure there's really a whole lot we can glean from the purchase of founders' stock here. To an outsider, it feels unfair, but I agree that without it the founders would have likely spent that $25M down to zero.
- MCRed 11y agoHow does it feel unfair to sell stock to investors? In the current scheme new shares are issued and everybody gets diluted, so the founders have less economic interest (as does every other employee). If the founders take some money off of the table, then they're just selling their shares directly--- and there's less dilution. (It's not the case that they're just pocketing some of the proceeds from the investment.) In that case the employees will be diluted less than they would be if the same investment amount was made and the founders didn't sell any of their shares. So it's better for employees. Ideally, though, I think all employees including founders, should be able to sell some of their vested shares in each round of funding. Maybe %10?
- toast0 11y ago$6M seems like a lot to take out of a $25M round, but if the investors were ok with it, and the founders were ok with it, how is it not fair? Earlier investors don't seem happy about it, but I'm not sure how much weight that has; early investors often have to accept new terms during a fund raising round; for better or worse.
- pbiggar 11y agoDoes it? They sold $6/160 = 3.75% of the company, likely about 15% of their holdings. Seems reasonable given the valuation.