
Tech VCs Promise to Never Disagree with Founders - s4sharpie
http://go.bloomberg.com/tech-deals/2014-08-05-tech-vcs-promise-never-question-founders-give-free-cash/
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harryh
The headline of this article doesn't really match the contents. Certainly
partners from Felicis Ventures will disagree with founders from time to time,
they just apparently won't vote against them in board votes. In many
circumstances this promise won't have much practical impact.

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kevinpet
The article doesn't clearly say board votes. It actually says "vote the
shares", which, I'm not all that clear how often or with what significance
shareholder votes happen in a pre-ipo company.

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harryh
I'm not gonna save never because I'm sure there have been bizarre exceptions
but....basically there are never shareholder votes. Only board votes.

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dirtyaura
When the composition of board itself is changed, I think that has to be agreed
by shareholders. There can be differences between legislations though.

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asanwal
Entrepreneur-friendly is big focus for many investors these days. Witness
Techstars equity back guarantee as just one example.

Felicis, based on its exits, is a top-tier micro VC (if you define it as
<$100M funds) so this may force the hand of others.

Of course, there are those that feel that "voting along is a unrealistic
commercial move that negates the investor's added value to his/her LPs". [1]

[1] From comments here - [https://www.cbinsights.com/blog/founder-vs-venture-
capitalis...](https://www.cbinsights.com/blog/founder-vs-venture-capitalist-
compensation/)

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frequentflyeru
Sounds like the headline of an Onion article...

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bitdiddle
+1

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liamshaw
Personally, as a CEO, I would like to have an investor questioning my moves so
that I am forced to consider my choices from different perspectives.

If I'm constantly being told I'm the golden boy then I'm doomed.

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aaronbrethorst
So...what happens when the next Gurbaksh Chahal[1] gets funded by Felicis
Ventures?

[1] [http://www.newyorker.com/tech/elements/gurbaksh-chahals-
ugly...](http://www.newyorker.com/tech/elements/gurbaksh-chahals-ugly-revenge)

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TheMagicHorsey
While I like that investors are now forced to give entrepreneurs a better
deal, this sounds like a move too far.

This is like a blank check for entrepreneurs with no strings attached, and no
consequence for failure. In fact, the share given to founders in the
diversified fund means that financial returns may be had even for a failing
business.

That doesn't sound like an entrepreneurial risk/reward type system anymore.
That sounds like a guaranteed reward for a bunch of "special" people who are
part of some special club.

In fact, it sounds like East Coast investment banking.

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jacquesm
It's exactly like the stock market, on with larger percentages.

Most people own their stocks totally passive, active shareholders are rare and
usually have a big stake in the company.

If everybody who is a shareholder of Google would show up at the shareholder
meeting there would be a bit of a space problem.

So passive investors are not rare at all, what is strange about this
announcement is that most VCs tout their _active_ role as a plus. This company
seems to be taking the opposite tack.

IMO that's wrong, investors can be a useful sounding board and if they
automatically agree with every C level decision then you lose a very valuable
source of criticism.

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bcx
At first I thought this title was a poorly timed April Fools Joke.

I would imagine there are only a few decisions the founders make that ever
come down to votes based on shares. Off the top of my head: Selling the
company, firing the CEO, electing a new board, diluting existing shareholders,
dividends.

The impact of this decision is probably heavily based on how often Felicis has
a big enough stake to be a factor in shareholder voting.

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amirmc
Minority protections probably already cover the cases you describe (eg veto
rights).

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jacquesm
Shareholder agreements typically cover even more of them (drag-along, tag-
along, first right to refuse and so on).

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arbuge
Certainly times have changed. If the bubble does burst anytime soon, people
might look at this in hindsight as being another warning sign we missed.

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001sky
"“We’ll be voting unconditionally with the CEO,” Senkut said in an interview.
“It’s time for bold moves.”///"

spoken like a true believer

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illumen
Great move.

If you just want to invest, and take your hands off, this is great. It means
you have less work managing, so you can make smaller 'bets'... err, I mean
investments.

Also means the team can get on with it, and have to spend less time managing
investors. Yes, some start ups do spend a lot of time doing stuff just to
present nicely to investors. From taking days off working on product preparing
the office so it looks more professional, to preparing speeches, and
developing further pitches.

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pskittle
Theoretically, if there is trust between the founders and the VC's shouldn't
both of them have one seat?

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iLoch
Suddenly the President/CEO title differences matter for co-founders.

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chaostheory
Ycombinator has forever changed the landscape for entrepreneurs for the better
=D

