
TATS – A new term sheet for startups - raad
https://venturebeat.com/2017/05/26/draper-associates-collaborates-with-lawtrades-to-help-private-companies-achieve-liquidity/
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chollida1
On first reading I thought this was a way for employee's to cash out without
requiring the company to go public, which I think most people who have worked
for a startup in the past 10 years would agree is sorely missing.

> The new set of documents explicitly state that the investors’ shares can’t
> be subject to restrictions on transfer (with minor exceptions) after the
> earlier of five years or a $100 million valuation.

But I guess its not...

> Ahmed adds that TATS does not have an impact on the common stock that
> founders and employees hold, as such stock is subject to a right of first
> refusal in favor of the company and the largest investors.

So I guess this just lets investors but not employee's get out of illiquid
companies? I guess this is good for a very, very, very small set of people,
but doesn't help the most vulnerable group, the employees.

I know its not fair to expect Y Combinator to have to solve every problem in
startup land but at some point you'd think they'd look up and realize that
they are making money, the founders are making money due to early cashouts,
VC's are making money but the employee's of Y Combinator startups are still
getting very little of the value compared to everyone else.

At some point employee's are going to realize that working for an early stage
startup isn't a great idea.

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YCode
> At some point employee's are going to realize that working for an early
> stage startup isn't a great idea.

I suspect it's always been the case that as one demographic of employees gets
wise to this another comes pushing and shoving through the door to fill the
seat.

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dmitrygr
Why else the focus on young new college grads? :)

* Enthusiasm & Energy

* Naivete

* Lack of family to keep them away from work

* Lack of understanding of how startup comp works

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DamonHD
This seems eminently sensible to me: (esp seed) investors want to have a
reasonable prospect of exit in a reasonable timeframe. This help with that.

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politician
Yesterday, HN was flush with posts on blockchain technologies. For employees
holding mostly worthless options, it seems like joining a startup that is
financed via token offering might be attractive.

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s73ver
Why? Now instead of a stock cert, I have a token subject to the same
restrictions, with fewer possibilities for redeeming.

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SkyMarshal
If the token is tradable on public markets they're immediately redeemable.
However, if a startup does an ICO and actually issues the tokens before they
launch the platform that uses them (for example, an Ethereum-based ERC20
token), the SEC has said they'll consider that a security.

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s73ver
"If the token is tradable on public markets"

Why would they be? And if they could do that, why bother with the added
complexity of that, and just make their stock tradable on public markets?

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SkyMarshal
_> Why would they be?_

Almost all of the Ethereum-hosted ERC20 tokens are. Instant liquidity,
according to @balajis:

[https://medium.com/@balajis/thoughts-on-
tokens-436109aabcbe](https://medium.com/@balajis/thoughts-on-
tokens-436109aabcbe)

 _> why bother with the added complexity of that, and just make their stock
tradable on public markets?_

It's far less complex to write a basic whitepaper and copy-paste ERC20 into an
Ethereum smart contract than it is to list a traditional stock on a public
stock exchange. You don't even need revenue, or even a working product.

[https://theethereum.wiki/w/index.php/ERC20_Token_Standard](https://theethereum.wiki/w/index.php/ERC20_Token_Standard)

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staticautomatic
I think it's silly that this is being treated in the article as if it's some
kind of invention. Structuring a deal like this has always been both possible
and easy.

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SandersAK
Do they also have a bridge they want to sell me?

This is a textbook version of "what you eat don't make me shit."

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dang
The problem with a comment like this is that readers can't learn anything from
it. Instead of venting, please explain.

