Tech VCs Promise to Never Disagree with Founders(go.bloomberg.com) |
Tech VCs Promise to Never Disagree with Founders(go.bloomberg.com) |
Felicis, based on its exits, is a top-tier micro VC (if you define it as <$100M funds) so this may force the hand of others.
Of course, there are those that feel that "voting along is a unrealistic commercial move that negates the investor's added value to his/her LPs". [1]
[1] From comments here - https://www.cbinsights.com/blog/founder-vs-venture-capitalis...
If I'm constantly being told I'm the golden boy then I'm doomed.
[1] http://www.newyorker.com/tech/elements/gurbaksh-chahals-ugly...
This is like a blank check for entrepreneurs with no strings attached, and no consequence for failure. In fact, the share given to founders in the diversified fund means that financial returns may be had even for a failing business.
That doesn't sound like an entrepreneurial risk/reward type system anymore. That sounds like a guaranteed reward for a bunch of "special" people who are part of some special club.
In fact, it sounds like East Coast investment banking.
Most people own their stocks totally passive, active shareholders are rare and usually have a big stake in the company.
If everybody who is a shareholder of Google would show up at the shareholder meeting there would be a bit of a space problem.
So passive investors are not rare at all, what is strange about this announcement is that most VCs tout their active role as a plus. This company seems to be taking the opposite tack.
IMO that's wrong, investors can be a useful sounding board and if they automatically agree with every C level decision then you lose a very valuable source of criticism.
I would imagine there are only a few decisions the founders make that ever come down to votes based on shares. Off the top of my head: Selling the company, firing the CEO, electing a new board, diluting existing shareholders, dividends.
The impact of this decision is probably heavily based on how often Felicis has a big enough stake to be a factor in shareholder voting.
spoken like a true believer
If you just want to invest, and take your hands off, this is great. It means you have less work managing, so you can make smaller 'bets'... err, I mean investments.
Also means the team can get on with it, and have to spend less time managing investors. Yes, some start ups do spend a lot of time doing stuff just to present nicely to investors. From taking days off working on product preparing the office so it looks more professional, to preparing speeches, and developing further pitches.