
Your VC Needs a Billion Dollar Exit. You Do Not - yarapavan
https://news.crunchbase.com/news/your-vc-needs-a-billion-dollar-exit-you-do-not/
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Felz
I'm surprised that founders preferred stock classes aren't more common. They
allow founders to sell a small percent of their stock to investors, enough
that they don't have to worry about money, and start caring more about big
exits. Aligning incentives is powerful.

Early employees probably need this too. If you really want smart talent (and
you should, you really need it), you should stop trying to screw them. I think
there might be vestiture reasons this might be difficult though (last I
checked founders prefersed can't be subject to vesting).

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mmt
> Early employees probably need this too. If you really want smart talent (and
> you should, you really need it), you should stop trying to screw them.

More so than founders, since those employees, in general, have no say in what
happens to the common stock, such as dilution into worthlessness.

It doesn't have to be (and probably shouldn't be) all-or-nothing, since the
point would be to align incentives in both the ideal/IPO situation and the
less than ideal M&A situation.

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paulddraper
Your VC needs a billion dollar exit and would like you to be that exit but
does not need you to be that exit.

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gringoDan
I've grown more and more disillusioned with VC over time. In my mind, there is
a fundamental incentive misalignment between venture capitalists and founders.

As the article mentioned, the VC business model is to look for the 100x
return, so they will encourage/force founders to make high-risk/high-reward
decisions. However, a smaller exit could be life-changing for a founder.

While VCs have a portfolio of investments such that the big wins offset the
losses, as a founder you only have one company and one life. You're not
diversified, making the downside risk much higher, especially if you're
spending 5+ years of your life working on a company that you're emotionally
invested in.

John Mackey, founder of Whole Foods, has a great quote on this: “Venture
capitalists are like hitchhikers with credit cards. As long as you take them
where they want to go, they’ll pay for the gas. If not, they take over the car
and throw you out.”

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turc1656
_" At Founder Collective, we’ve invested in 270 companies, and only one has
gone public so far. Of the rest, 30 have gone out of business, 60 have been
acquired, with the remainder are still in operation. The reality is that when
starting a company, the most likely outcomes are bankruptcy or acquisition."_

90/270 is not a majority. Sure, I get it that the fate of some of the
remaining has yet to be determined but it doesn't seem like the "most likely"
outcomes are bankruptcy or acquisition. If anything, sounds more like 50%
chance you remain in business (after you account for the fate of the remaining
companies).

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icedchai
Out of that 50%, how many are making any real money?

