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0 pointsdasil0038y ago0 comments

Offering equity is nothing more than giving a stake in the company. An IPO is only one way that can pay off, and these days probably not even the most likely.

Of course VCs want you to believe that an IPO is the only successful exit, because they want moonshots. But as a founder you need to keep your own council as to the wisdom of pursuing growth at all costs.

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jasode8y ago

>Of course VCs want you to believe that an IPO is the only successful exit,

Yes IPO is not the only way. VCs will also consider an acquisition by Google/Facebook/Microsoft/Amazon at a good price to be a "successful exit" and will explicitly go over those possible scenarios with the founder.

But there are other motives behind exploring the acquisition scenarios:

1) VC is actually asking in a more roundabout way if the founder has an answer for the above giants cloning the feature and rendering his startup obsolete

2) VC wants to gauge founders' openness to sell to earliest buyer or has plans to stick it out and stay independent until the end

I don't think Sequoia VC is complaining too much that WhatsApp never went to IPO. They still got a good return when Facebook bought it.

Also, I don't think VCs are actually that single-minded about IPO-or-else... especially for SaaS/enterprise type of startups. They will tell the founder that the more likely exit scenario is a bigger company acquiring them. This is not a big secret.

dasil003OP8y ago

You can also grant equity in a bootstrapped or angel-funded company where the goal is not an exit, but to build a profitable business. The main thrust of my point is that granting equity to employees is not only for VC-funded companies in the typical moonshot case study.

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