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Comment by ritchiea | Hacker News Reader

Doesn't capital also come with the expectation/pressure you need some sort of liquidity event in the next X years because the VC's fund depends on it?

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Theoretically you could negotiate a deal where you don't have a responsibility of reporting to your first round investors (not far fetched given the current climate).

In practice seed investments consist of multiple $100k-$250k checks, which are generally too small for the investors to put any pressure on your startup. Seed investors write dozens or hundreds of these checks, and they don't have the bandwidth (nor desire) to put any pressure on the founders. The pressure kicks in when you raise series A and get partners on your board who only make a few investments per year.

Is it really true that you could take a $250k seed round, build something profitable-but-not-huge, then just quietly run the resulting business? I thought that carried a pretty strong expectatation that you'd be hiring employees and looking for series A pretty soon.

Definitely interesting if there are other good routes for "slightly-too-big-to-bootstrap" ideas (beyond the obvious "savings" and "transition from consulting")

Absolutely, it of course depends on the terms. But in my experience investments for that amount never involve a board seat and normally involve a smallish amount of equity so investors have no means to pressure companies into taking an A later if they don't want to. There is some expectation that you'll do something with this money and normally for early stage companies that means hiring people, but I've never heard of an investor strong arming an entrepreneur into hiring people when they didn't want to.

Where does your belief that they do come from?

You must have never heard of situations where a founder gets pushed out of their company by the VC because they are not meeting certain targets.

Pretty sure parent has heard of those situations since he explained why this wasn't one of them.

That situation is not possible in a scenario where the investor has minority control of the company (ie a seed round).

Wufoo did YC then didn't raise a Series A, before eventually selling to SurveyMonkey. Olark raised from YC, then a Seed and that's it. Statuspage did YC and then Seed and then sold to Atlassian. These are just some examples off the top of my head, I'm sure I could come up with a ton more.

Thanks for these examples. Going for a relatively early sale/acquisition/acquihire returns capital to the seed investors, so not really quite the scenario that I was thinking of, but the Olark example is very interesting.

I wonder whether they've paid dividends to YC?

In the instances of those acquisitions, it was purely the choice of the founders as the investors have no control over that decision.

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