Paul Graham has an awesome article about venture capital out and this one idea really has me excited:
Whatever they say, the reason founders are selling their companies early instead of doing Series A rounds is that they get paid up front. That first million is just worth so much more than the subsequent ones. If founders could sell a little stock early, they’d be happy to take VC money and bet the rest on a bigger outcome.
So why not let the founders have that first million, or at least half million? The VCs would get same number of shares for the money. So what if some of the money would go to the founders instead of the company?
Which is a brilliant idea. I’m not saying it because I want $1M (though that wouldn’t hurt) but it would allow me to think of the long term. Focus on a larger ROI while allowing me to partially cash out. The VCs would of course have to be confident in the long term success of the company.
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Trackback on Nov 7th, 2005 at 4:23 am
Paul Graham on the Venture Capital Squeeze – or will founders be able to get VC funding AND partially cash out ?
Paul Graham has a provocative suggestion in his post, The Venture Capital Squeeze [via Kevin Burton]: as they fund the working capital of a startup, VCs should consider acquiring a small portion of Founders equity in order to provide them witha (someti…
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Trackback on Nov 7th, 2005 at 11:21 am
Paul Graham on the Venture Capital Squeeze – or will founders be able to get VC funding AND partially cash out ?
Paul Graham has a provocative suggestion in his post, “The Venture Capital Squeeze” [via Kevin Burton]: as they fund the working capital of a startup, VCs should consider acquiring a small portion of Founders’ equity in order to provide them with a (so…
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November 7, 2005 at 7:44 pm
Money upfront for work on the backend, that is crazy smart. Maybe you could get paid to NOT start a startup – that way you get to cash out before starting… Save everyone a lot of time and headaches.