csentropy

It's early, but lifestyle companies are <10% of our applicants. Mostly clustered around series A/post seed.

Agree. Founders contribute a percentage of the equity they would fully own, if fully vested to the pool, not a fixed percentage of the equity of the company.

Good analogy.

Fair point. That dates back to the panic period weeks ago when people were refreshing the "RIP" good times" deck from sequoia, putting their name on it and sending it off to their portfolio companies :)

You will be surprised at the spectrum of companies that are interested in doing pooling, as were we.

If they want to take it upon themselves, they should.

Having said that, there is a reason coop pools like insurance are managed by third parties.

Maybe, just may be a realistic assessment of the chances of success is an under appreciated entrepreneurial trait.

Maybe this trait can co-exist independently with the ability to forge ahead DESPITE knowing how low the odds are, because you want to see something happen.

Maybe it is that silicon valley groks this as "an irrational belief" when in fact, it is the compulsion to forge ahead despite knowing the odds.

Cool reference. Thank you!

Entrepreneurs free riding on the VC model is the opposite of what really happens: VCs free ride on founder risk.

We see VCs themselves encourage founders to take money off the table with a secondary sale in rounds as early as series A. They also look for founders with previous exits, and usually pay a premium for their startups or invest with a much lower threshold.

This idea that "founders that are not starving are going to be less motivated to succeed" is one of several silicon valley mythologies that don't stand up to scrutiny empirically or otherwise.

Most people don't start companies to sit back and chill as soon as they are financially secure. If they did, and you had invested in them and now have to force them to stay hungry, you should reconsider being a VC.

Hard transfer ban clauses are rare, usually they are ROFRs. Some boards may push back, but they do see the benefit of the founder having an aligned support network and we believe many will let this happen.

We believe that this exception to the ROFR or transfer restriction becomes a standard clause built into most term sheets in the future.

Great questions, it will be on our FAQ page

I've heard that some YC founders approached them about it, but the management of this structure may be more work that distracts YC from it's focus. We hope every accelerator and VC film does this eventually, we want to power as many of them as we can under the hood.

All valid questions. We are adding more information about the company, the people and the business model of Founderpool.

Founderpool does take a share of the pool of equity as platform fee, it will be transparent and will be publicly available.

Thank you for the feedback.

Exactly the response I wish every founder has ready, when they hear this line of objection from their VC.

Because of the condition for participation in the pool is that your stock should continue to vest, for the membership shares in the pool to continue to vest.

Exactly correct

Founderpool is based on peer selection. The belief is people are better able to pick companies in their vertical better.

But it is true that larger pool across sectors is more diversified

I LOVE hearing stories like yours, and they inspire us everytime.

You hit the nail on the head. The sad fact is that as an entrepreneur grows and matures, his risk tolerance goes down.

Founderpool's mission is to maintain the entrepreneurial risk tolerance as you grow and acquire skills and connections, by reducing the opportunity cost over time. We believe it can have a positive systemic impact on the startup ecosystem.

I believe founder institute does as well, but in their case they divide uo the pool into 4 parts, 3 of which go to FI, they local chapter, mentors and one back to founders if I remember right

We decided it is of interest to the founders in the audience and not necessarily as a show HN (which is in our mind a tool specific people like to play with)

Only three people are with Founderpool. me, manoj and geoburke

Founderpool are not affiliated with YC in any way. I am not sure who suggested that. I am part of the founderpool team.

Priced round is for indexing the value of stock being assigned to the pool.

If the founder has liquidity, before joining the pool, he would be joining the pool right?

Or did I misunderstand?

It does. In a verticalized approach, if you pick the right sector (biotech for ex) and other founders see the value in your work, you can get rewarded even if your company fails for reasons to of your control.

Even in a shock scenario, there are sector winners (see biotech and funeral homes in covid pandemic)

That is a great point. We spent a lot of time thinking about the adverse selection issue.We narrowed in on Peer selection with stable matching, which seems to mitigate this issue. We are learning..

Thank you.

One more risk founders and entrepreneurs need to brace for : Regime uncertainty. Political uncertainty added to market risk, macro, pandemics, on and on...

It is similar. The market segment and pool construction ton mechanism as well as the legal infrastructure is different.

We believe this scales beyond startup founders to education, athletics, and any domain where the outcome distributions follow some kind of power laws

Thats a very nice sentiment. It is nice to hear from investors like you who have a portoilfio for diversifying your own risk, but deny that explicitly for founders, who also have no management fee as a fallback.

Have you heard of founders getting money for secondary shares in series A (airbnb, FB, Clubhouse etc)? Or second time founders (who are financially secure form a prior exit) getting a premium in valuations?

It is a complex structure under the hood. There is a master LLC, holding c corp and an investment advisor.

Tax implications for the founders are similar to their founder stock obligations, when liquidation happens

we make it really easy to get the nuggets of information you need at a glance. You can only rank your top 10.

It is the only way to go for bootstrapped companies. There is a pool for bootstrapped companies