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Comment by hmahncke | Hacker News Reader

How is "all of Toptal’s stock [is] in the hands of one person" when Toptal "attracted funding from well-known investors including Andreessen Horowitz." Doesn't funding from a16z typically end up with a16z owning stock?

[unfortunately can't read the whole article behind the paywall]

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My guess (and this is just a guess, as I too can't read the article), is that the investment was a convertible note, and they actually paid back the debt instead of allowing it to convert into equity. But I am no expert and I don't know the facts — I was just wondering the same thing and this was the scenario I landed on as a plausible hypothesis.

Same guess. The investors either 1) got there principal back with no interest or 2) they still have there money in and it only get a value upon raising money or a sale. Likely it’s #1. Investors didn’t get screwed. They just didn’t win.

The funding was in convertible notes which convert to equity in the next funding round. Presumably these agreements don't have any provisions for other exits.

In which case the investors have not been screwed because they are sophisticated enough to know the possible outcomes - that's just business.

I suspect the VC team would say "well played that man".

Do you really want to burn a bridge with a16z/AH in the tech industry?

They may say "well played" in so many words, in public. Privately? They may be marshaling their bottomless war chest to unmake you.

He openly states he has no trouble with interest from investors: https://www.toptal.com/investors

And I can't see why his existing investors wouldn't be interested - although they would perhaps take more care with the terms.

His ethics don't seem to be weird, compared against stories about some other founders.

I can't see why you make predictions about how he should act or how VCs would act (what's your expertise?)

That first link about investor interest is entirely his word, which is worthless according to his former employees.

If read/listen to MA or BH at any length, they heavily emphasize the value of relationships and a network.

This behavior seems absolutely anathema to their stated ideals.

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