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Comment by sebleon | Hacker News Reader

> $2.5m of $3.5m was for founders and early team [of Series A money]

Terms:

> Series A class of shares included a protective provision which meant that Buffer was unable to offer liquidity for other shareholders

> a return of 9 percent annual interest on their investment at any point

So... the founders raised a series A mostly to give themselves liquidity, at the expense of a high interest loan that also threw their early investors under the bus? Well, they definitely achieved their vision of putting together an atypical round.

Given their lack of interest in going down the VC-startup path (high growth at all costs, keep raising, aim for IPO, etc), it's unclear what their motivations were to raise a VC round in the first place.

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How exactly does offering an immediate return to those early investors throw them under the bus? Buffer put together a deal and their investors took it. For them to "buy" their equity, it had to be "for sale", and it turns out it was.

The normal story of what happens when a company takes an investment planning for hypergrowth and that doesn't pan out is that the company "pivots" to some usually-less-promising hypergrowth opportunity and repeats until it dies. The outcome here seems far better for investors, which is presumably why they took advantage of it.

Ah, to clarify: Buffer threw the seed investors under the bus when they inked a deal with the Series A investors.

However, kudos to the founders for fixing this mistake later on. While their intentions at Series A were questionable (raising to pay themselves), they made things right later on, though they did pay the price of a co-founder and CTO departure. Everyone makes mistakes, but true character can be seen when you deal with them.

> Our seed investors had been supporting the company for almost six years, and several were starting to ask when they may get a return

> The Series A class of shares included a protective provision which meant that Buffer was unable to offer liquidity for other shareholders (seed or common) without approval from a majority of the Series A.

Seed investors offered a deal. They weren't spring chickens.

Who feels bad for VCs though? 1. they didn't have to sign the sheet 2. It's really refreshing to see founders and people with vision be in control for once, instead of the opposite

Stories are legion of VCs throwing their founders under the bus the moment it suits them.

Not everybody is perfect. Sometimes goals change and you realize what you wanted before isn't what you want today. Plus, he did mention his cofounders left, so maybe his ex-cofounders wanted the VC route.

Right on, mentality likely shifted along the way.

And yes, everyone makes mistakes, but author shows great character in making things right later on.

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