Something that really bothers me about the startup V.C. ecosystem is that I never read things like this from founders. There are lots of blog posts of horror stories about investors, usually from the point of view of other investors' (or people like Steve Blank).
I've heard Fred Wilson say that V.C.'s can't afford to be assholes anymore because it would end up on twitter and their deal flow would dry up overnight. Well... where are they? Where are the scorned founders? Do they not know how to blog? When they get fired unfairly and screwed out of their stock (which does not appear to be that rare) are they banished from the internet? Is there something in their contracts that says they can't talk about being fired or they would have to give up what little scraps of compensation they are left with?
As an outsider, the lack of anything but glowing recommendations of investors from founders makes me think not all is as it seems. Is there an implicit fear of being black listed if you speak up, ending your career as an entrepreneur? Does hackernews, techcrunch, etc all suffer survivorship bias (and not waste a single digital word on the losers)?
You hear the horror stories in personal conversations. No one wants to blog it because people are so interconnected. That VC who screwed you is probably still good friends with lots of other people who you don't want to risk alienating. That said, reputations matter. Entrepreneurs talk. The stories get out eventually.
No actionable information in this rant. Why not either skip the name calling and give us a factual account of what happened naming names; or tell us what to look for to spot an asshole VC ahead of time.
People are always too afraid to air dirty laundry in public, because it might get them blackballed -- "you'll never raise money in this town again!", "you'll never get a job at a VC-backed firm", "we'll never do a deal with you again!", etc.
I can only think of one case off the top of my head where all the nasty details were revealed and all the names were named - the mid-2000s lawsuit by the epinions founders against Benchmark and August Capital, for similar 'let's wipe out the common' hijinks.
When the lawsuit became public, there was a ton of talk about how the lawsuit would ruin their careers, and they would never raise money again. But Naval Ravikant, one of the plaintiffs, seems to have done just fine. Mike Speiser, another one of the plaintiffs, also did pretty well for himself. Don't know what happened to the rest, but I'd be willing to bet they're still quite comfortably in startup land.
The consequences of naming names aren't as dire as you think they are. For the love of pete, if someone really shouldn't be funding entrepreneurs, tell us who it is.
I'm guessing this isn't really a message for HN; it's a message for ASSHOLE VC -- "I saw what you did, and you won't be in any of my deals in the future."
Or alternatively, it's a message for founders -- "I'm the kind of guy who doesn't do deals with folks like ASSHOLE VC."
It's better when lawyers know both sides of the game well. I would think a lawyer who starts out on the VC side, makes a pile, then goes to work for the startup side would be better.
Always retain your own counsel. Regardless of your equity position or if the business has counsel giving you advice.
If you have the ability to make material discussions ( vote yes or not ) this should be one rule you never break or even slightly bend for that matter.
[EDIT]
Furthermore, if you are under the impression that your employment / involvement with the company is to result in some form of equity compensation spend the $750 for an hour of a solid business / securities attorney's time to confirm this fact. These agreements are getting more complicated by the day.
Wherever money's involved, there will be people willing to screw you. Too bad he didn't out them - it's an unhealthy situation when assholes aren't named and can continue their assholeish ways without any retaliation
Seth and the Foundry guys are so awesome and helpful. I think there is a direct correlation to how accessible and helpful a firm is even if they don't invest and how well their fund is doing. I believe the former gets them the deal flow they need for the latter.
I've never heard anything negative about Foundry or True Ventures. Every big VC, even the best, seems to have someone eith a tale of woe, but not those guys.
[+] [-] pg|14 years ago|reply
[+] [-] TimH|14 years ago|reply
[+] [-] rdl|14 years ago|reply
[+] [-] fedd|14 years ago|reply
[+] [-] unknown|14 years ago|reply
[deleted]
[+] [-] pgroves|14 years ago|reply
I've heard Fred Wilson say that V.C.'s can't afford to be assholes anymore because it would end up on twitter and their deal flow would dry up overnight. Well... where are they? Where are the scorned founders? Do they not know how to blog? When they get fired unfairly and screwed out of their stock (which does not appear to be that rare) are they banished from the internet? Is there something in their contracts that says they can't talk about being fired or they would have to give up what little scraps of compensation they are left with?
As an outsider, the lack of anything but glowing recommendations of investors from founders makes me think not all is as it seems. Is there an implicit fear of being black listed if you speak up, ending your career as an entrepreneur? Does hackernews, techcrunch, etc all suffer survivorship bias (and not waste a single digital word on the losers)?
Where are they?
[+] [-] bfe|14 years ago|reply
http://waxy.org/random/arsdigita/
[+] [-] pmikal|14 years ago|reply
[+] [-] joshfraser|14 years ago|reply
[+] [-] asmithmd1|14 years ago|reply
[+] [-] earlyresort|14 years ago|reply
I can only think of one case off the top of my head where all the nasty details were revealed and all the names were named - the mid-2000s lawsuit by the epinions founders against Benchmark and August Capital, for similar 'let's wipe out the common' hijinks.
When the lawsuit became public, there was a ton of talk about how the lawsuit would ruin their careers, and they would never raise money again. But Naval Ravikant, one of the plaintiffs, seems to have done just fine. Mike Speiser, another one of the plaintiffs, also did pretty well for himself. Don't know what happened to the rest, but I'd be willing to bet they're still quite comfortably in startup land.
The consequences of naming names aren't as dire as you think they are. For the love of pete, if someone really shouldn't be funding entrepreneurs, tell us who it is.
[+] [-] jnovek|14 years ago|reply
Or alternatively, it's a message for founders -- "I'm the kind of guy who doesn't do deals with folks like ASSHOLE VC."
[+] [-] r00fus|14 years ago|reply
As a founder you should question the relationship between the VCs and any counsel you hire.
[+] [-] nikcub|14 years ago|reply
[+] [-] andrewljohnson|14 years ago|reply
[+] [-] lcargill99|14 years ago|reply
[+] [-] d0ne|14 years ago|reply
If you have the ability to make material discussions ( vote yes or not ) this should be one rule you never break or even slightly bend for that matter.
[EDIT]
Furthermore, if you are under the impression that your employment / involvement with the company is to result in some form of equity compensation spend the $750 for an hour of a solid business / securities attorney's time to confirm this fact. These agreements are getting more complicated by the day.
[+] [-] praptak|14 years ago|reply
[+] [-] suking|14 years ago|reply
[+] [-] rdl|14 years ago|reply
[+] [-] madaxe|14 years ago|reply
[+] [-] Geekette|14 years ago|reply