

Startup Founder Diversification Ideas? - epi0Bauqu

For a while now, I've been trying to think of possible arrangements where startup founders could achieve some diversification along the lines of VCs and angel investors.  Two initial ideas:<p>1) A group of n founders give each other x% of their companies.  I suspect n or x could not be that big for obvious reasons.<p>2) Individual founders swap y% of their companies with each other.  Diversification emerges after multiple swaps.<p>As a startup founder, would you ever consider doing something like this?
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epi0Bauqu
Here is some elaboration on this concept in an attempt to try to get some sort
of discussion going before this thread is essentially forever gone.

I was imagining that the entrepreneurs who would be getting together would be
in a similar place in their careers, i.e. just starting out, already had a one
successful exit, or already had multiple successful exits. The idea would be
that each founder roughly thinks the others have about the same chance of
success as themselves.

The primary scenario I was thinking about was the first type where n is about
x is about 10. For example, 10 founders can form an LLC, and each give 10% of
their companies to it. The profits then flow back to them upon successful
exits.

I just thought of another completely different way to do it that I haven't
thought through as much. It would be to form one company of more closely knit
founders and have them work on separate projects for some defined amount of
time, with vesting. The idea here would be webapps can be made pretty well by
one person. The company can make n of them, hoping that at least 1 is
moderately successful. It would be at the discretion of the company founders
whether to let someone give up on an idea and start another such that no one
gives up too soon. And of course the other founders would spend some amount of
time critiquing the others' projects. In this case, on exit, each founder
would get a much higher %, from 1% in the first case to as much as 20% if
there were 5 founders. Obviously it is a very different type of scenario
financially.

I don't know if any of this has been done before. I suspect it has, but I
haven't heard of it. From the lack of response so far to this thread, I
imagine it doesn't grab the average Internet startup founder. I suppose one
reason is that people always think their idea is better. By getting into an
arrangement like this, you are by definition conceding that you might fail,
and thus have to cede some of your ego.

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pg
It would make life complicated for a startup to have a lot of small
shareholders. Especially if they weren't accredited investors by the legal
definition.

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epi0Bauqu
True. 1) above could be organized as a collective, in which case there would
be just one additional shareholder.

