Hacker News Reader

Comment by moralestapia | Hacker News Reader

>No one gives away 20% of a company for advice.

You'd be surprised at how common that is.

Wouldn't you be inclined to believe that @naval wouldn't want to use that capital, connections and whatnot to support the single project of its own authorship in its lifetime? The results speak for themselves.

I have another theory, VCs freeride on the success and luck of other people's projects, which (sometimes) are so good and so profitable that they can even afford to have someone leeching off them. Just look at how many stories are there where the founders end up with zilch and regret ever taking VC money.

Any of the random guys on Twitter that are building and shipping stuff and making 4-5 figures on their side projects is worth more than a 1,000 Denpoks sharing their "wisdom" with you.

View on HN

This is kind of a confusing perspective considering VCs are giving you money to pay for the operations of your business. Money is money no matter how stupid the giver is, their money won’t leech value from your company itself.

As for founders ending up with nothing, in those cases their investors ended up with much much less than they were hoping to too. Plus there’s plenty of other cases where founders get rich off a worthless company because of the beneficence of VCs.

>>Money is money no matter how stupid the giver is, their money won’t leech value from your company itself.

Yeah, this isn't true for a number of reasons.

1) The money you accept is given in trade for a percentage of the company and that means influence in the company. That influence almost always comes in the form of board seats which literally drive the direction of the company. I've seen many successful companies do some really stupid things because the investors wanted it that way and it actively hurt the business.

2) Certain investors come with a set of prestige. You're the n a forum which is known for just that.

Who you take money from certainly matters.

> That influence almost always comes in the form of board seats

Most pre-seed and seed investors don't take board seats.

And at Series A and above they are putting in enough money where it seems fair enough.

You don’t seem to understand basic economics. When you get on a bus and pay for your ticket, is the rest of the ride a free ride?

VCs are running a business too. Most VCs fail to return the capital to their LPs. That’s right, then spend 10 years of their life working with startups and have nothing at the end. They take RISK and they try to DERISK their investment by helping the portfolio company.

There’s also a LOT of stories where a VC invests a LOT of money only for the company to get recapped. The founders are given (some say rewarded) with new equity with the VC is wiped out. In many cases a founder will exit handsomely and the early VCs who came in end up with nothing. That’s the risk.

VC is simple but it’s not easy.

> then spend 10 years of their life working with startups and have nothing at the end

How do they avoid starving to death after the first few days?

I imagine they spend money to consume food... after which, both food and money are gone.

What money? I thought there was no reason to be a VC?

Or do they get paid? Is it a lot?

Yes. There is a lot of money to be made in VC. Look at "exit strategy" for more info.

Reply on news.ycombinator.com