teej 4 days ago

10% is a large drag on the cap table.

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  • tptacek 4 days ago

    If that actually becomes material, they'll offer to buy shares in the next round. That's the point at which this whole conversation becomes interesting; right now, it's complexity for its own sake.

    I know the feeling! I left a company some years back in a complicated way, and my instinct was to drill in as well. It seems like a big deal! It really isn't, though.

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    • apparent 4 days ago

      Or they'll find a way to dilute the co-founder's shares so they don't have to buy them out.

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      • tptacek 4 days ago

        If that's going to happen, it's going to happen. I've heard as many stories of it happening as I've heard stories of people unhappy with the amount of liquidity they were able to achieve early in the life of a company that later became successful.

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  • takklz 4 days ago

    This is a joke right? Seed investors will get 10-30% of a company for under a million dollars which will be blown through in less than a year. That’s means they’re a drag on the cap table right?

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  • umeshunni 4 days ago

    What does that mean?

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    • tptacek 4 days ago

      That theoretically future investors will be reluctant to invest because the founder 10% is crowding out equity that could otherwise be used to attract key performers down the line.

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      • throwpoaster 4 days ago

        Nah, they can just issue more. He's already giving up 40% -- plenty of head room.

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