The PE market around firms at about this size is getting very, very interesting, and I think increasingly you’re going to see founders build companies engineered to achieve a similar outcome, with a capital stack to match.https://twitter.com/Shpigford/status/1326153473956716544 …
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It would be tough to justify for tier 1 VCs or PMs at Google but if you were a product-savvy engineer living in, without loss of generality, St. Louis, how does $4M in equity after taking a reasonable salary for 5-7 years sound? Sounds pretty good, I think.
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Replying to @patio11
I'm quite curious about why the seed investors walked away from $800k, when the purchase prices was $4M. Is that something you can explain (in the general case, if not in this specific case)? Thx.
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Replying to @MorlockP
Speaking generally, VC is investing in the expectation of hitting "home runs." Companies which do not end up achieving that trajectory affect returns minimally. One might choose to balance return of the original capital with the impact on your firm's brand w/ founders.
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The conversation might go: "You took a shot. It didn't pan out. Such is the nature of the venture business. We don't want to block what would be a good outcome for you and the team, so we will give you what is effectively a gift and get out of your way to achieve win for team."
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Replying to @patio11
sure, but ... $800k isn't pocket change (at least, not to me). What are the VCs buying for that? Reputation capital?
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writing off an $800k loss gets you $300 or 400k of benefit getting $800k back gets you $800k of benefit
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