The Founders Fund Has The Right Idea
When I raised my first significant round of venture capital financing, the firm I worked with was quite reasonable. We were very lucky in that regard.
They allowed me and another founder to sell of some of our stock and get a little financial reprieve from the sacrifices we had made over the previous three years. It wasn’t a massive sell-off, but it helped.
Most investors, especially venture capital firms don’t go along with that. They believe that it’s better to keep the founding executives “hungry”. They believe that if a founder gets a little cash, they’ll lose their drive and commitment. I think that’s an interesting position for a VC to take, considering the hefty management fees they pocket after institutional investors give them their capital. It doesn’t seem to diminish their hunger so why will it dimish the hunger of their portfolio founders?
It certainly didn’t diminish my hunger. In fact, having some financial relief eased our stresses and helped us work more effectively.
If you decide to look for funding and you have something that interests investors, be sure to take the time to look for an investment team that will keep your needs, your interests, and your input as a founder, in mind.
The Founders Fund is a venture firm that seems to be doing just that. Specifically, they are taking a unique and refreshing approach by allowing their entrepreneurs to sell stock to future investors through their Series FF preferred stock.
Take a look at this recent article about The Founders Fund in Inc. Magazine, “Putting Founders First”. It’s a refreshing “pro-entrepreneur” angle that other VC’s will be wise to consider.
Check out these great blogs for more information on this topic:
Why Early Stage Venture Investments Fail
Startup Success: How To Find Venture Capital
Venture Capitalism - Luck or Science?
Tags: entrepreneur, Founders Fund, Inc. Magazine, Series FF, VC, Venture Capital
November 7th, 2008 at 12:53 pm
[...] The Founders Fund Has The Right Idea [...]
November 19th, 2008 at 3:46 pm
[...] It’s about letting go of the emotion and excitement of a good idea and taking a venture-capitalist approach. This instinct is something that keeps one constantly assessing how a business model will [...]