Re:On Startup Capital Efficiency
by lmeyerov on Monday April 08, 2019 @09:04PM
(#19610705)
Y combinator and its ilk are 100k
I'd tell the investor they can do 5-10% at that, or better, a convertivle note w 20% discount and $3-5M cap and (A) pointing to YC and (B) pointing out no follow on investor would join if they did higher -- after seed/A/B, only 50-60% of co should be sold. If a real investor followed, you'd be stuck paying legal fees to wash out the angel investor.
This all assumes a scalable startup, not a consultancy etc
I'd tell the investor they can do 5-10% at that, or better, a convertivle note w 20% discount and $3-5M cap and (A) pointing to YC and (B) pointing out no follow on investor would join if they did higher -- after seed/A/B, only 50-60% of co should be sold. If a real investor followed, you'd be stuck paying legal fees to wash out the angel investor.
This all assumes a scalable startup, not a consultancy etc