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Comment by what-to-do | Hacker News Reader

Amateurs. Why not wait a week or two, explore options, see who else is going to respond to this?

Seriously? I don't think you grok quite how disruptive this is. This is a better deal than any YC company has gotten... probably ever. The only way someone could top it is to pay founders to let them invest. Add to that the fact that YC almost certainly had piles of legal analysis done to protect the founders' interests.

Convertible debt paperwork is really only a few pages... Heck, they might've used YC's boilerplate docs to simplify things.

Because there's no downside. You can take the $150k and stick it in a bank account and still be better off.

I always hesitate when someone says there's "no downside" to accepting large sums of money.

I don't understand. They aren't diluting shares, they aren't liable if the company fails to reach Series A, and by all accounts there do not seem to be any strings attached with regard to oversight (ie. the founders don't need to "answer to" the investor in any way). All they are doing is giving a portion of their future shares to that investor now, at the same value as they would later. It's a no-brainer - what is the downside in your opinion?

What people are pointing out is that nobody outside of this batch in Y Combinator has seen the paperwork, so nobody can actually verify that there isn't something hidden or sketchy present.

I trust Paul implicitly, and I suspect most YC Founders do, and that probably has a lot to do with the acceptance rate. I wasn't in the meeting obviously, so I can't know how I would have reacted to the specifics, but I can say knowing only what I know now I probably would have at least taken the weekend to do my homework.

That makes sense. After re-thinking my previous comment, I suppose another potential downside might have to do with somehow missing out on the numerous copycat offers that I imagine will arise. At any rate, although I'm surprised that everyone has signed on so quickly it does seem like a really good deal for all involved.

Edit: phrasing.

Do angel investors seriously give terms like "you can have this convertible note, but only if you don't already have a convertible note from Yuri"?

What rational reason would an angel investor have to avoid investing in a company that has taken this investment?

Probably not. But I imagine that when it comes to the details some angels might be a better fit than others for certain companies due to their networks, etc. Also, if I had a company that needed about $200k and I had one offer for $150k from Yuri and one for $200k from another similar investor I might only take the $200k instead of both - it would represent a (hopefully small) difference in available shares once it was time for Series A. This is all speculation though - while it seems like fun, I haven't yet been on either side of the investor equation.

What's the downside to thinking about it for a week or two to see if there are any non-obvious problems?

He might change his mind.

(Or he might die of a heart attack, or the Russian government might seize his assets, or any number of other unlikely scenarios might make him unable to close the deal.)

Who says they didn't?

The offer was just made to them last night.

Actually, the TC article says many of them signed papers at the offer meeting itself.

I understand the offer sounds fantastic, but surely they'd want some advice first?

Obviously they didn't, but it seems a little rash.

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