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Re:Conflicted Capital by rsweeney21 on Wednesday March 10, 2021 @11:30AM (#26412979)
Raised money from VCs for my last startup. Series A investor made all sorts of overtures about how founder friendly they were and how supportive they would be.

The week after we closed our series A they told me I had to hire a COO. I asked, "You trying to get me to hire my replacement?" "No, we'd never do that. How could you even think that?"

Less than two months after we hired the COO they fired me. The COO was made the CEO and he ran the company into the ground.

The lesson for founders is to never, ever, ever give up control of your board/company. Always maintain control of a majority of the board seats.

Re:Conflicted Capital by jasode on Wednesday March 10, 2021 @01:29PM (#26414367)
>The lesson for founders is to never, ever, ever give up control of your board/company. Always maintain control of a majority of the board seats.

Maybe you're too close to the situation so what you say above feels to you like a universal truth but it actually doesn't help me as a reader.

To raise the quality of discussion, we'd need to know what your realistic options were at the time you raised Series A.

E.g... Did you have meaningful revenue making VC capital optional? Did you need VC money to have a runway and make payroll for a few months?

In other words, if you're in a situation where rejecting VC money means your business shuts down, it becomes a moot point if you're still 100% in control of all board seats.

As for board seats composition, was it something like You=1, VC=1, and Independent=1? If so, was the independent automatically on VC's side to fire you or were they truly independent?

If you don't want to get into the details to maintain privacy, that's understandable. But also understand that your advice born out of your experience doesn't have enough context for us.

Re:Conflicted Capital by choppaface on Wednesday March 10, 2021 @05:30PM (#26417304)
"To raise the quality of discussion..."

To raise the quality of discussion, we need for all the email and Signal messages from the investors / VCs for a variety of deals to be made public. That would be a major step towards reducing the amount of information arbitrage in start-up funding (not to mention blog posts like the OP).

Re:Conflicted Capital by DenisM on Wednesday March 10, 2021 @01:27PM (#26414334)
Being friendly is much like being powerful - if you have to say that you are, you aren't.

(with tons of apologies to Margaret Thatcher)

Re:Conflicted Capital by InitialLastName on Wednesday March 10, 2021 @04:01PM (#26416182)
Same thing with honest.
Re:Conflicted Capital by stanrivers on Wednesday March 10, 2021 @11:49AM (#26413231)
This is not cool - I am sorry. Investor here - they should never do that. Make sure you tell others about how this went down. If they were planning on getting rid of you, that needs to be part of the upfront discussion etc.
Re:Conflicted Capital by fractionalhare on Wednesday March 10, 2021 @01:18PM (#26414245)
It was evidently Insight Partners. They led the Series A on OP's last startup: Insight Partners. They evidently led the Series A for OP's last startup, which according to their LinkedIn is Numetric. Crunchbase tells you what you need to know: https://www.crunchbase.com/funding_round/numetric-series-a--...
Re:Conflicted Capital by nowherebeen on Thursday March 11, 2021 @04:24AM (#26422029)
We need ratemyinvestor.com to weed out the flock of bad investors.
Re:Conflicted Capital by rsweeney21 on Wednesday March 10, 2021 @12:05PM (#26413466)
They are a large and very lawsuit happy VC. It's not worth the risk to warn other people about this VC.
Re:Conflicted Capital by covidthrow on Wednesday March 10, 2021 @12:42PM (#26413884)
It would be a shame if someone else created a throwaway account to express similar sentiment about a similar firm and named them.
Re:Conflicted Capital by throwaway9172 on Wednesday March 10, 2021 @01:09PM (#26414147)
It doesn't take a lot of insight to look at the crunchbase of OP's former company and look who lead the series A...
Re:Conflicted Capital by fractionalhare on Wednesday March 10, 2021 @01:20PM (#26414254)
Re:Conflicted Capital by stanrivers on Wednesday March 10, 2021 @12:52PM (#26413995)
Yeah - I more mean... don't go out there and go out of your way to advertise that they did this.

But founders should talk to other founders about their experience with different investors. The good, the bad and the ugly.

In those situations, you can make it clear - in objective terms - what happened and why you would not take money from them again. Don't call them names or anything.

Re:Conflicted Capital by vcvc on Wednesday March 10, 2021 @12:15PM (#26413580)
What VC?
Re:Conflicted Capital by fractionalhare on Wednesday March 10, 2021 @01:18PM (#26414237)
Insight Partners. They evidently led the Series A for OP's last startup, which according to their LinkedIn is Numetric. Crunchbase tells you what you need to know: https://www.crunchbase.com/funding_round/numetric-series-a--...
Re:Conflicted Capital by choppaface on Wednesday March 10, 2021 @05:36PM (#26417382)
I'm aware of Max Levchin doing something similar to a YC founder, but with the involvement of another VC at the time.
Re:Conflicted Capital by cgb223 on Wednesday March 10, 2021 @02:31PM (#26415140)
Jesus...

Did they at least buy you out or did they literally rob you of your company?

Re:Conflicted Capital by jacquesm on Wednesday March 10, 2021 @01:26PM (#26414327)
So, that's a bad trip, sorry to hear about this, and noted.
Re:Conflicted Capital by k__ on Wednesday March 10, 2021 @12:28PM (#26413719)
Why would you even give up more than 49% of your company?
Re:Conflicted Capital by sebmellen on Wednesday March 10, 2021 @12:30PM (#26413752)
You might not realize that a 5% stake with two board seats is much more powerful than a 25% stake with one board seat. Corporate dynamics are weird.
Re:Conflicted Capital by k__ on Wednesday March 10, 2021 @12:45PM (#26413922)
Ah, okay.

I think, in Germany it's different, sorry.

Re:Conflicted Capital by sebmellen on Wednesday March 10, 2021 @03:34PM (#26415843)
Ganz ok. Ist ja sehr verwirrend.
Re:Conflicted Capital by rsweeney21 on Wednesday March 10, 2021 @12:33PM (#26413788)
It doesn't matter what % of your company you own. What matters is whether or not you control a majority of the board seats.
Re:Conflicted Capital by texasbigdata on Wednesday March 10, 2021 @01:20PM (#26414259)
Well....technically.... what matters is your ability to replace and/or appoint board members :)
Re:Conflicted Capital by nradov on Wednesday March 10, 2021 @12:49PM (#26413949)
Because you need the money and have a weak negotiating position. Not every startup is like Facebook.
Re:Conflicted Capital by throwaway98797 on Wednesday March 10, 2021 @11:44AM (#26413152)
Did you make some money though?
Re:Conflicted Capital by rsweeney21 on Wednesday March 10, 2021 @11:45AM (#26413165)
None.
Re:Conflicted Capital by throwaway98797 on Wednesday March 10, 2021 @11:55AM (#26413330)
That really sucks. I think in the bubble of YC seems like this doesn’t happen but then there are counter examples like yours. Thank you for sharing.
Re:Conflicted Capital by choppaface on Wednesday March 10, 2021 @12:13PM (#26413560)
I know of at least three successful YC companies that fired founders and then took a hit... YC isn't that special of a bubble, especially these days.
Re:Conflicted Capital by Andy_G11 on Wednesday March 10, 2021 @12:33PM (#26413783)
Did you and your accountant review the shareholders' agreement thoroughly before finalising the fundraising with the new investors?