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Doesn't this de-incentivize founders since they're giving up their most valuable asset, their equity?
by sshamoon 6y ago
Doesn't this de-incentivize founders since they're giving up their most valuable asset, their equity?
- geoburke 6y agoOnly 1-5% of founder's shares are contributed. 95% or more retained. It's insurance; not a plan B.
- csentropy 6y agoGood question. It hasn't empirically. See founders taking money off the table in secondary in series A, Airbnb etc. Plus, financially derisked founders are paid a premium (those with previous exits) by VC. So we know that this is mostly an academic argument, but it is a resasanoble concern. Moreover, if 90-95% of your holdings are your company, you are still motivated to make it a success, despite the 5-10% diversification. And most great founders are motivated by more than pure financial upside.