DISQUS

VentureBeat: The “FF class” of stock, for founders who want cash early

  • Andrew Fife · 2 years ago
    I think founder motivation is also a potential issue here. What does it say about a founder's perception of the value of their own stock if they want to sell rather than hold? Paying something out to a founder like Barney Pell, who had credit card debt to pay off sounds like a good idea so s/he can focus on build the business rather than worry about debt collectors. However, there are a lot of young founders who might feel like they've already made if allowed to cash out even relatively small amounts of money. In this case, they may loose focus. The issue is tricky and I wouldn't know how to bring it up as an entrepreneur, nor what to think of it if I were an investor.
  • Bradley Mazurek · 2 years ago
    Andrew, I agree and disagree with you. I think there is a good possibility that this technique could be abused, but I also think that it goes a long way towards allowing the founder to focus more on the business.

    It reduces friction and attention necessary in other parts of the founder's life (ie, the personal side of life). If taking such money allows the founder to focus on the business instead of whether they can afford something in their personal life (think ordering in pizza versus making Kraft Dinner, or helping alleviate spousal disagreements due to financial hardship), I think it's a good thing.
  • NewGuy · 2 years ago
    This may be a simple solution but why not give the founders an employment bonus to take care of past debts and a decent salary to stay focused.
  • Mike Boich · 2 years ago
    The car story is actually predated by Woz, who old some Apple stock early to buy a car that was known (accurately I think) as "the $5M Porsche".
  • john · 2 years ago
    As is often the case, we are all more than a year behind Paul Graham:
    http://paulgraham.com/vcsqueeze.html
    "If VCs are frightened at the idea of letting founders partially cash out, let me tell them something still more frightening: you are now competing directly with Google."
  • jeremy liew · 2 years ago
    We're seeing more of this trend here at Lightspeed, especially with consumer internet companies since they take so little money to start. This has not been the case as much in other sectors. We've recently closed on one financing where founder liquidity was a portion of our investment (company had been in business 4 years) and are in the process of closing a second (company has been in buinsess 1 year). More on our blog - follow the link
  • Neil · 1 year ago
    Does this apply to UK stock aswell?
  • Mary · 1 year ago
    I stumbled here by accident but will stick around!