
FounderPool: A community for founders to share risk and diversify their equity - manojdv
http://www.founderpools.com
======
tonystubblebine
As you get older without an exit, you start to freak out a bit about your
retirement. At least that was true for me.

I'm 1000x better as an entrepreneur at age 42 than I was at age 27. But I'm
also 100x more worried about some basic financial things like whether I will
be able to retire, maintaining a mortgage, keep up financially with my
spouse's career and her changing life expectations.

And what helped stabilize me was some advisor shares that hit or I expect to
hit, Beyond Meat (realized) and Calm (expected).

So I would 100% trade my own equity for equity in another startup just because
of the size of returns. A 0.1% equity stake in a startup that ends up hitting
is life changing.

And if you're about the entrepreneur life, then a hit on an advisor stake can
set you up to never have any pressure to leave this life. One of the common
patterns in my own circle of founder friends is how often they need to take a
job in between companies. I've, so far, avoided that, and just moved on to
swinging at the next thing.

~~~
m0zg
> A 0.1% equity stake in a startup that ends up hitting is life changing.

For the vast majority of startups, "hitting" is $100-200M acquihire. 0.1% of
that is only 200K. If you can get in on something like Beyond Meat, sure, but
that's the kind of a company which won't be a part of something like this.

Speaking from the other end of this spectrum, BTW, my risk tolerance is higher
now than it's ever been. I don't have to work at all, and my mortgage is paid
off. But it's much more difficult now to convince me that some harebrained
startup scheme will work. :-)

~~~
geoburke
Much of our research has been with founders at YC & 500 (cohorts who represent
the Beyond Meats of the world). The majority we spoke to, including the
breakout unicorns, stated they would have have participated in equity pooling
with their batchmates during the batch. We also learned the darlings of their
batch were often not the breakout successes, and later upstaged by others in
the batch.

~~~
zhoujianfu
I actually had exactly this idea with my YC knock-off, HMC INQ.

The first cohort (5 cos in 2017) I offered them to all pool some of their
equity. But first I polled how much each would be willing to give. The results
were 0%, 0%, 2%, 5%, and 20%.

So, I abandoned it. Ironically the one that offered 20% is doing the best so
far.

~~~
csentropy
Maybe, just may be a realistic assessment of the chances of success is an
under appreciated entrepreneurial trait.

Maybe this trait can co-exist independently with the ability to forge ahead
DESPITE knowing how low the odds are, because you want to see something
happen.

Maybe it is that silicon valley groks this as "an irrational belief" when in
fact, it is the compulsion to forge ahead despite knowing the odds.

------
DevX101
My two cents: I think this is a fantastic idea and I've wanted to see
something like this for years. That said, this is one of those things where
unfortunately the reputation of the persons behind FounderPool matter a lot to
me, and other founders. Yet there's no info on the site about who's running
this. Founders are making a massive gamble putting their companies into this
novel legal arrangement and I'd want to see someone(s) reputable and well
respected by the broader community at the helm.

I'd also make it crystal clear how FounderPool plans to make money. I see the
website copyrighted to Heterodox Capital LLC. What's the distinction between
these two entities? Will either of these orgs be taking a management fee from
the equity put into the pool? If so, how much? I see nothing on the website
about compensation which makes me uneasy about pursuing this further.

All that said, the core idea, de-risking founders is a massive opportunity and
someone's eventually going to get this right and make entrepreneurship a
viable path for thousands of talented founders who wouldn't otherwise start a
company.

~~~
csentropy
All valid questions. We are adding more information about the company, the
people and the business model of Founderpool.

Founderpool does take a share of the pool of equity as platform fee, it will
be transparent and will be publicly available.

Thank you for the feedback.

~~~
jbgud
Agreed, I'd also like to see more transparency - nevertheless, this is
exciting. Good luck!

------
gnicholas
Can the people involved with the company note their affiliation? It seems like
there are several folks chiming in, and some comments make the affiliation
clear (eg, by speaking in the first-person about the company). But in other
comments it’s much less clear whether someone works for the company or just
got info off the website.

I’m also a little confused that this isn’t a “Show HN”, but they talk about YC
with authority. Are they in YC? Some other affiliation?

~~~
csentropy
Founderpool are not affiliated with YC in any way. I am not sure who suggested
that. I am part of the founderpool team.

~~~
gnicholas
Thanks for noting your affiliation. The YC question came up because of the
OP's comment "This is one of the most founder requested features in YC", which
makes it sound like the company is well-connected to the accelerator.

How did you decide to do this as a regular post instead of a "Show HN"? Did
you already do one, or make a strategic decision? Who else among the
commenters is affiliated with the company?

~~~
csentropy
We decided it is of interest to the founders in the audience and not
necessarily as a show HN (which is in our mind a tool specific people like to
play with)

Only three people are with Founderpool. me, manoj and geoburke

------
wtvanhest
It’s a reasonable idea, but would make a lot more sense for employees. While
outside forces impact companies, founders and executives are responsible for
outcomes.

Employees have little individual power to impact strategy and are more likely
the victims of poor management decisions.

~~~
csentropy
Founders and executives "play a role" in outcomes. The future of any company
pre liquidation is uncertain.

Agree with employee pools. That is the next step version for founderpool and
it is literally the most requested!

~~~
wtvanhest
I respectfully disagree. Founders blame the macro, but that blame is very
often misplaced.

Even at massive scale, similar business diverge in profitability due to
strategy decisions during all market conditions, including pandemics and other
blackswan events

~~~
geoburke
Misdirected blame to preserve ego does not excuse the fact that the founders
are the ones with the biggest impact on their own success. Access to a network
incentivized to provide resources, fundraising, introductions, hiring, etc,
can only bolster success probability.

------
tqi
This sounds similar to Pando [1], which is doing income pooling for
professional baseball players [2]:

"Nobody has to pay a cent until they've made it to the majors and they've made
$1.6 million. Then that guy has to kick 10% of his salary back to his pool
mates."

[1]
[https://www.pandopooling.com/baseball](https://www.pandopooling.com/baseball)
[2] [https://www.npr.org/2019/10/25/773532516/some-baseball-
playe...](https://www.npr.org/2019/10/25/773532516/some-baseball-players-are-
entering-income-pooling-agreements-to-fix-imbalance)

~~~
smabie
Poker players to much the same thing and trade percent stakes before
tournaments. And once again, modern portfolio theory triumphs!

~~~
geoburke
I'm not a poker player, but today a friend analogized SIDE POTS; opt-in
diversification with 3 more opportunities per hand. De-risks every player
participating in the side pot.

------
aaisola
How do you overcome the adverse selection problem? ie. only founders who know
their startups are duds want to diversify their holdings?

~~~
manojdv
1) We screen companies based on their quality, ex: a round raised within the
last 3-6 months. 2) Founders get to interact with participating companies and
rank them based on their insight. Only companies that are highly ranked get
into a pool. A pool is also dynamic and founders in the pool can invite new
startups based on their interactions.

Overall, this is based on the concept that founders are often good judges of
other founders/startups. And pool is more than just for risk diversification,
they get a community of founders ready to help your startup because they are
vested in it.

~~~
mkolodny
Does a startup's equity in the pool vest over time? I'd be concerned about a
startup joining the pool, and then immediately dissolving their company.

~~~
bananaface
Would vesting help? Instead of dissolving you just... wait. Pretend to build.

~~~
geoburke
Good way to get oneself kicked out of the pool before fully vesting.

~~~
bananaface
How do you legally kick them out?

~~~
csentropy
Because of the condition for participation in the pool is that your stock
should continue to vest, for the membership shares in the pool to continue to
vest.

~~~
bananaface
Wait so your startup has to continue to grow in order for you to be able to
claim profits from the pool? Doesn't that defeat the purpose?

------
nmfisher
A few months' back, someone on Twitter criticized a similar platform, calling
it an outright scam.

I said that was totally unfair, and that it's one thing to call it a bad deal
(which really depends on the percentage given up and the quality of the
companies in the pool), it's another thing to call it a scam.

That prompted the "pro-VC crowd" to start calling me stupid and naive -
"startups need cash, not equity", "if you don't back yourself, I won't back
you", etc etc.

If there's one thing I learned, it's that VCs have an almost irrational hatred
for this model. Unsurprising, given the pool makes founders less reliant on
them. No matter what, you retain your pool share, so your insurance policy is
something other than "go back to VC cap in hand".

I also wonder if it may indirectly create a unionizing effect - if a non-
negligible number of founders can start banding together, they can push back
on onerous terms (liquidation preferences etc).

~~~
dehrmann
> Unsurprising, given the pool makes founders less reliant on them

How? The startup still need VCs for funding.

If I were a VC, one gripe would be that it might hurt a founder's motivation.
At 1% of a founder's equity, it's not so much that they're not working to make
the next big thing, but in the back of their mind, they know they might get
$1M for it. My other concern is that this almost freerides on the VC model.
It's a way for a founder to get the benefits of being an LP, but without the
fee structure.

~~~
nmfisher
> How? The startup still need VCs for funding.

For precisely the reason you set out in your second paragraph.

Assuming your startup is in the VC bucket to begin with, you have two choices
when you start floundering. Either ask for more money, or shut it down.

The latter practically guarantees you leave with nothing, so naturally, you
prefer the former. This means VCs are almost always in a position of leverage
to extract a larger share/more onerous terms/etc.

With a stake in a founder pool, "walking away" becomes a much more attractive
option. You already have some baseline value that makes you far less reliant
on whatever opportunistic VC you're in bed with.

~~~
geoburke
Here, walking away doesn't leave the entrepreneur wealthy, but we hope, covers
some opportunity cost. A safety net. This can provide a source of strength in
VC negotiations as well as a foundation for the founder to make calm, rational
decisions rooted in long term success.

------
mauriziocalo
Have you actually modeled out the potential payouts?

How did you choose the 1% number (percent of their equity that each founder
contributes) as well as the pool size of < 25?

My quick back-of-the-envelope calculation:

Expected payout to each member would be:

    
    
      1% * avg_valuation_of_companies_in_pool * avg_percent_ownership_at_exit
    

Assuming an average valuation (in the literal sense, total exit value of all
co's in the pool / number of co's) of $100M [2] and assuming that the founders
own roughly 15% at exit, the expected payout would be only $150K excluding
taxes, which seems quite low.

[1] Modeling should be somewhat doable leveraging public data. For example,
you can use YC company data in
[https://ycombinator.com/topcompanies](https://ycombinator.com/topcompanies)
[https://ycombinator.com/companies](https://ycombinator.com/companies) and
simulate what the payouts would be if you were to choose 25 companies from a
given batch at random.

[2] $100M is likely in the right ballpark. According to
[https://www.ycombinator.com/](https://www.ycombinator.com/) :

> Since 2005, we've funded over 2,000 startups.

> Our companies have a combined valuation of over $100B.

the average valuation of YC co's would be ~$50M; if you exclude half of those
that are in recent batches (haven't had time to realize their value and don't
really contribute towards the $100B total) it might be closer to $100M.

Under a FounderPool model, an example of this would be a pool of 20 co's in
which 2 companies end up exiting for $1B each and the rest essentially $0.

~~~
manojdv
1) Pools sizes are not fixed number and more over, founders can invite other
companies to existing pool on a rolling basis 2) We have done modeling,
obviously selection is the top determinant of payouts (20% avg. success rate
vs 40% success rate) but bigger pool sizes ensure potential for a breakout
company. Happy to share if interested, contact us at contact at
founderpools.com

~~~
mauriziocalo
> bigger pool sizes ensure potential for a breakout company

Yes, but the payout gets distributed among a larger number of companies.
Increasing the pool size lowers the variance, but the expected value remains
the same. Lower variance might be desirable for some people (more
predictability -- at the limit it's as if you're investing 1% of your equity
into an "ETF" of early-stage startups), whereas some people might prefer
higher variance (higher potential upside if they join a pool with the next
Stripe).

My concern is that if founders contribute 1% of _their equity_ (not _1% of the
entire company at exit_ ), the _expected value_ itself is quite small -- on
the order of $150K under reasonably optimistic assumptions -- for something
like FounderPool to make sense.

On the flipside, increasing the 1% by an order of magnitude might make more
sense from a utility maximization point of view, but even less sense from an
emotional standpoint.

------
danicgross
Wonderful idea. These exchanges are very common in other markets. In my
experience, a proclivity for equity sharing tends to have an adverse selection
problem with early stage founders. The best founders are irrational, and this
seems like a highly rational idea :)

But I’d imagine investors and employees would be very interested. Also worth
noting tax treatment around this issue is evolving:

> In particular, a senior campaign official said a Biden administration would
> take aim at so-called like-kind exchanges, which allow investors to defer
> paying taxes on the sale of real estate if the capital gains are reinvested
> in another property.

[https://www.bloomberg.com/news/articles/2020-07-21/biden-
pro...](https://www.bloomberg.com/news/articles/2020-07-21/biden-
proposes-775-billion-plan-funded-by-real-estate-taxes)

~~~
csentropy
That is a great point. We spent a lot of time thinking about the adverse
selection issue.We narrowed in on Peer selection with stable matching, which
seems to mitigate this issue. We are learning..

------
gadders
Wouldn't you want to pool with companies that AREN'T in the same market area?
I would imagine you would want to try and diversify membership so that returns
aren't correlated.

Also if people are in the same group are in the same vertical, isn't there a
risk of competition?

Still think it's a good idea though.

~~~
manojdv
Yes and no. Some founders want to diversify in other verticals, but a majority
of founders we work with prefer their comfort zone, because they can evaluate
startups better. Right now, we are not constraining in anyway and it might
evolve to support thematic or diverse pools.

------
motohagiography
[https://en.wikipedia.org/wiki/Tontine](https://en.wikipedia.org/wiki/Tontine)

I really like this idea, but it reminded me of the tontine episode of Archer.

~~~
csentropy
Cool reference. Thank you!

------
kumarski
I have questions buzzing through my head.

How does this work?

If it's this good, why aren't VC's already doing this amongst portfolio
founders?

How do you catch companies founded at the same time with close valuations to
do "shared pools" equitably given all parameters?

~~~
ojbyrne
It’s been done before: [http://ebexchange.com/](http://ebexchange.com/)

~~~
geoburke
This is secondary market liquidity, yes? If so, there's unfortunately no
demand till series C, and the board needs to allow secondary sales, which
competes with the company's own ability to raise capital. We're seeing VCs at
later rounds include cash payouts to founders to dissuade secondary market
activity.

Also it's not either/or. Participating in a pool does not block the founder
from liquidating shares on the open market.

~~~
ojbyrne
Yeah I guess it’s changed. [https://techcrunch.com/2008/04/16/eb-exchange-
funds-provides...](https://techcrunch.com/2008/04/16/eb-exchange-funds-
provides-safety-net-for-entrepreneurs/)

------
rasengan
I will never invest in a startup where the founder(s) don't believe in their
companies. Moving forward all terms I negotiate will explicitly state that
this (e.g. things like FounderPool) will not be a possible scenario.

~~~
tqi
Thats like saying you'd never drive with someone who uses a seatbelt because
wearing one means they don't "believe" in their ability to drive safely.

~~~
gnicholas
Interestingly, pedestrian injuries went up significantly after seatbelt laws,
for the reason you note/deride.

~~~
tqi
That doesn't sound right... seatbelt laws forced people who otherwise would
have felt confident enough to drive without it to wear one. Low confidence
drivers always had the option to wear one at any time. From only study I could
find on the subject [1]:

"We distinguish, following the literature, between fatalities among car
occupants, who may be directly affected by using seat belts, and fatalities
among nonoccupants (pedestrians, bicyclists, and motorcyclists), who do not
use seat belts and can thus be affected by seat belt use only indirectly...
Our findings indicate that seat belt use significantly reduces fatalities
among car occupants, but does not appear to have any statistically significant
effect on fatalities among non-occupants. Thus, we do not find significant
evidence for compensating behavior."

Maybe the invention of seat belts could have that effect, but that coincided
with so many other changes to automobile technology / urban development that
any observed effects are correlated at best.

[1]
[https://web.stanford.edu/~leinav/pubs/RESTAT2003.pdf](https://web.stanford.edu/~leinav/pubs/RESTAT2003.pdf)

~~~
gnicholas
A more recent study seems to indicate otherwise. I have no idea which study is
better designed.

[https://ideas.repec.org/a/eee/trapol/v44y2015icp58-64.html](https://ideas.repec.org/a/eee/trapol/v44y2015icp58-64.html)

------
whatl3y
> Apply to a pool in your startup category, within 3 months of the valuation
> event.

Most "valuation events" for startups are seed or series X fundraisers, no? So
how could founders who bootstrap participate in this, if at all?

~~~
manojdv
We are using this as a screening for adverse selection, but founders who are
bootstrapped can also apply if they have proven traction (we have a few
stellar startups who were highly ranked but never raised money)

~~~
eganist
How about 409A valuations for those who've bootstrapped?

(You probably know what it is, but for non-founders or others who haven't been
through it - [https://carta.com/blog/what-
is-a-409a-valuation/](https://carta.com/blog/what-is-a-409a-valuation/))

~~~
marcinzm
Aren't 409A valuations significantly lower than VC valuations for the same
company? So wouldn't bootstrapped companies be at a disadvantage by having to
use a lower 409A while VC companies get to use the higher VC valuation?

edit: I see, bootstrapped is their own pool so the two valuations never get
compered against each other.

~~~
eganist
Does mean there's potentially more unforeseen upside from an acquisition exit
though. I wonder if that might make the bootstrapped pool a more attractive
pool to be a part of.

------
jrpt
How is this structured legally and what are the tax implications? Have you
spoken with a tax attorney about it?

~~~
csentropy
It is a complex structure under the hood. There is a master LLC, holding c
corp and an investment advisor.

Tax implications for the founders are similar to their founder stock
obligations, when liquidation happens

~~~
lachyg
Is contributing to the fund a taxable contribution? I would assume so since
it's a diversifying event.

~~~
geoburke
Contribution is done through a note. Not taxable until the transfer of shares
upon some liquidity/exit event in the future.

~~~
beambot
So it's a forward contract...?

~~~
geoburke
Yes, we see that as most frictionless way to accomplish this at scale

~~~
lachyg
Is there more that can be read on this somewhere? How it's taxed, what're the
implications, how is it structured?

~~~
csentropy
Great questions, it will be on our FAQ page

------
supernova87a
One danger I see is that unlike an insurance company, which does a serious
amount of due diligence and selection of the risks it takes on, this
company/idea completely leaves it up to the founders/"investors" (however you
wish to call it) to make judgement calls about their own and other people's
risk, without much pooled knowledge or history. I doubt founders are very good
at that.

When an insurance company sells a policy, they have something on the line in
terms of risk themselves -- they have to pay out. Here, the company just acts
as facilitator for founders to spread risk however they self-organize to do
so. Is that likely to be right? Who cares if some people get burned when
something inevitably goes bad in the pool?

It's much like the general tech company issue that thinks all the complexity
and need for oversight, etc. can be externalized to others to deal with. It'll
police itself. In the meantime, rake in your percentage for being the
platform.

I think an idea like this will take much more work (or the verification /
pooling / trust sides) than they expect -- for it to work well and people to
be willing to join. Otherwise, bad money will drive out good.

~~~
azorychta
Village Capital has been testing out the model of having peer-selected
investment for ten years now-- [https://vilcap.com/entrepreneurs/peer-
selected-investment](https://vilcap.com/entrepreneurs/peer-selected-
investment)

~~~
geoburke
Not only that, Erik has done a good job cheerleading the concept of risk
pooling for founders:
[https://twitter.com/eriktorenberg/status/1123331923466522624](https://twitter.com/eriktorenberg/status/1123331923466522624)

------
jaronlukas
This is a great idea. I'd be willing to do this with my keto cereal companies
if there was a pool of other promising food startups.

~~~
gadders
I would suggest for this to work as a way to share risk, you would want to
have a pool of companies whose returns are not correlated.

~~~
csentropy
It works both ways.

1\. In a verticalized approach, your startup risk approaches your sector risk,
if pool is large enough.

2\. In a stage based pool approach (sector agnostic), risk is more diversified
but rankings will be less meaningful. For ex, a rocket company founder may not
be a good judge of CPG companies.

~~~
gadders
Fair points.

Does it depend on what you are hedging against, maybe? i.e. "my startup not
being successful" vs "the economy tanking/oil prices trebling/whatever".

~~~
csentropy
It does. In a verticalized approach, if you pick the right sector (biotech for
ex) and other founders see the value in your work, you can get rewarded even
if your company fails for reasons to of your control.

Even in a shock scenario, there are sector winners (see biotech and funeral
homes in covid pandemic)

------
bilifuduo
This is a really interesting model that has been tried a couple times in
venture. Probably most notable is Upside
([https://www.upsidevc.com](https://www.upsidevc.com)). Curious to get your
thoughts on them + why you decided to go the founder exchange approach as
opposed to raising a fund?

------
bonobo886
Does your platform accept early employees as well? The first 10 employees are
essentially founders and while they typically do not receive as much of the
upside as a founder, they do bear the same risk. Allowing an early employee to
diversify that risk would be a huge value add to a much wider potential
network.

~~~
geoburke
It's something we're looking into. Would be a great market But for clarity,
it's generally understood the employees do not bear the same risk as the
founders, who contributed months/years of sweat equity as well as actual
capital. Oh and risk of lawsuits.

An employee is paid day 1 and the risk beared does not surpass opportunity
cost of a paid job at a successful startup vs a failed startup.

~~~
khazhoux
> who contributed months/years of sweat equity as well as actual capital

Very often not true in silicon valley. The only sweat equity most founders
contributed was toiling through coffees and get-togethers on University Ave or
SOMA for a few months until they got the seed money. Then they hire engineer
#1 at 1/80th their own equity.

Founders at funded startups pay themselves.

During an acquihire, founders get executive roles, salaries, bonuses, and
equity, while "non-founders" are just back to the grind.

The notion of "founder risk" in SV-style startups just doesn't exist like it
did a generation or two ago.

------
zackmorris
This is awesome, the only thing I see missing is that the primary capital of a
founder is potential, not equity. That's why banks and other institutions
don't typically lend to startups. It would be nice to see that reflected in
some way, as something of value that's counted somehow.

~~~
csentropy
Funny you say that. "Deriskinga nd monetizing future founder potential" is
literally on my whiteboard.

We are exploring ways to structure the pool with a portion of it in
cash/capital. more coming

------
richardwhiuk
Why are you splitting sectors into different pools? Surely that reduces the
diservification of risk, and increases the overlap between the companies,
which creates blurred incentives?

~~~
manojdv
We are not splitting pools into themes. It was used as an example in the
website. Founders get to choose the companies, so if all space tech companies
want to band together, they can form a pool, its an option.

------
joncp
Besides the obvious risk pooling, does this also help founders (esp. first-
timers) with negotiating terms? It seems like the other pool members would
stand to gain a lot from that.

~~~
geoburke
You could consider the other members of the pool as an extension of your
advisory board. They are incentivized to share their resources, wisdom,
network, strategy, and 1-1 help on specific needs like this.

------
calmessense
I think this has the potential to be successful if done correctly. What's your
business model, are you charging or taking a cut of the equity yourselves

~~~
manojdv
We cover all legal infrastructure and management costs. In the exchange, we
reserve the right for a 10-20% (depending on pool risk) carry based on pool
outcomes.

------
sshamoon
Doesn't this de-incentivize founders since they're giving up their most
valuable asset, their equity?

~~~
csentropy
Good question. It hasn't empirically. See founders taking money off the table
in secondary in series A, Airbnb etc.

Plus, financially derisked founders are paid a premium (those with previous
exits) by VC.

So we know that this is mostly an academic argument, but it is a resasanoble
concern.

Moreover, if 90-95% of your holdings are your company, you are still motivated
to make it a success, despite the 5-10% diversification. And most great
founders are motivated by more than pure financial upside.

------
asparagus123
Good timing. as a founder I could use something like this more than ever

~~~
geoburke
Which aspect attracts you most?

~~~
asparagus123
de-"riskifying" my startup right now during covid. this would reduce my
pressure very slightly and at this point anything helps

------
gverrilla
It's a very nice idea, and I hope you implement in a great manner! Only thing
I disaprove is "Being a founder just got riskier" on landing page lol

~~~
csentropy
Fair point. That dates back to the panic period weeks ago when people were
refreshing the "RIP" good times" deck from sequoia, putting their name on it
and sending it off to their portfolio companies :)

------
killnine
Interesting. Does anyone know of anything else like this out there?

~~~
forgotmysn
pando is seeking to expand outside of sports. id expect them to have something
like this soon

------
imlina
Most likely will see a lot of lifestyle business founders, unlikely to find
companies that will blitzscale and go on to become unicorns in this lot.

~~~
geoburke
Why?

~~~
danieltillett
Adverse selection.

~~~
csentropy
It's early, but lifestyle companies are <10% of our applicants. Mostly
clustered around series A/post seed.

------
BlockchainMike
Is this going to be a single pool, or will founders be organized into rounds?

What sort of support are founders expected to provide to other founders in the
pool?

~~~
csentropy
1\. Single pool, based on rounds, but new companies can join a pool with
consent from all aexisting companies

2\. Support is entirely up to them, but the goal is to create an engaged
community with strong incentive alignment to help with investor pipeline,
customer intros, partnerships, hiring, strategic advice etc

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forgotmysn
I wouldn't be surprised if YC implements a version of this internally

~~~
csentropy
I've heard that some YC founders approached them about it, but the management
of this structure may be more work that distracts YC from it's focus. We hope
every accelerator and VC film does this eventually, we want to power as many
of them as we can under the hood.

~~~
forgotmysn
lol im sure you do, as does pando.

and ya, that makes sense. it should be offered by YC and other accelerators,
but it should be managed by alumni and pool members, not by the investing
party.

edit: a word

~~~
csentropy
If they want to take it upon themselves, they should.

Having said that, there is a reason coop pools like insurance are managed by
third parties.

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aaronbrethorst
Or work for a well-paying company and invest heavily in index funds...

~~~
geoburke
Agreed. Avoid the need for Founderpool by avoiding becoming a founder =P

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La1n
How much does the pool take? Or better, what are the costs?

~~~
manojdv
Right now, there are no costs for participating founders (we cover all legal
infrastructure and management costs). In the future, we reserve the right for
a 10-20% (depending on pool risk) carry based on pool outcomes.

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missSatoshi1
Seems super interesting! Will follow progress!

~~~
csentropy
Thank you

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tomaspaulo
Can you pool Asian/Latin and US startups?

~~~
manojdv
Yes we support everyone and are geographic independent

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SMAAART
Techstars does something similar.

~~~
csentropy
I believe founder institute does as well, but in their case they divide uo the
pool into 4 parts, 3 of which go to FI, they local chapter, mentors and one
back to founders if I remember right

~~~
oluomike1
Was about mentioning this as an FI alumni.. Awesome idea, kudos to the team.

~~~
manojdv
Thank you.

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maxk42
This is the worst idea I've ever heard.

If I were a VC and I found out one of the founders in my portfolio had become
involved with FounderPool I would immediately drop them and cut my losses.

Being a founder takes a huge amount of confidence: You have to believe,
against all odds, that you will be successful. If you really do believe you'll
be successful then it wouldn't make sense to trade your soon-to-be valuable
equity for a blend of equity which is certain to contain soon-to-be-failed
startups.

Being an investor takes an even larger leap of faith in many regards. Swapping
your equity for what is essentially "startup insurance" sends the signal that
you do not actually believe in your startup and that's a strong indicator of
imminent failure.

Compounding the issue: Since founders who believe they will be successful will
generally be likely to avoid the equity pool, we can surmise that FounderPool
will actually contain a who's-who of failing startups.

It's a bad bet no matter how you slice it.

~~~
bynormous
If I was a founder and I found out a VC would hedge their bets by investing in
other startups besides mine, I would drop them in an instant. A VC should
guarantee they will put their full faith in only my startup. /s

~~~
csentropy
Exactly the response I wish every founder has ready, when they hear this line
of objection from their VC.

