Hacker News Reader

Comment by ericd | Hacker News Reader

I'm not sure - as a common stockholder, I'd be very worried about the liquidation prefs on a lot of these high flying companies. If we see their valuations come back to earth even a relatively modest amount, common shares become worthless. Also, unlike a BigCo, it can be very hard to get any liquidity unless they're friendly to secondaries.

View on HN

What’s ycombinator’s policy in their startups, is it friendly to secondaries ?

aren’t the founders common stockholders ?

I believe founders have preferred shares, and employees have common shares.

Edit: Above can be disregarded, see below replies, I misremembered my options paperwork.

There are definitely exceptions, but the classic scenario is that the founders get common stock, not preferred.

Seconding this, I can't remember ever hearing of founders getting preferred, so their incentives are generally aligned with the other employees.

I don't know the policy on secondaries. But yeah, founders are almost always common stockholders in my experience, and they certainly don't want a preference overhang.

And to be clear wrt my original comment, I think DoorDash is an excellent business, and I have no reason to believe that the valuation isn't fully justified, I'm just speaking more generally about the funding environment of companies doing large rounds at high valuations, and if a macro trend pushes startup valuations in the other direction.

Reply on news.ycombinator.com