> But they were incredibly gracious and both agreed to write off their investment.
So the investors just accepted to lose $800k while the founder was getting $3.7M?
Can someone explain the logic here?
So the investors just accepted to lose $800k while the founder was getting $3.7M?
Can someone explain the logic here?
$500k came from a fund General Catalyst set up specifically to encourage startups to build new businesses that integrate with Stripe. [0]
The goal for the money was to enrich the Stripe ecosystem. Not generating returns for investors.
If the money came from a regular fund without the Stripe affiliation, General Catalyst 100% would not have accepted the $800k loss.
[0] https://www.prnewswire.com/news-releases/general-catalyst-in...
Doubt it. $800k is not a lot of money in the investment ecosystem.
It's pretty obvious the business didn't pan out as well as intended. It's not really worth their time anymore.
Still. They could have caused troubles and tried to recoup their $800k out of the $4M. They were nice not to.
The money will be written as a loss and go through some accounting/tax trick to minimize the effective loss.
Something doesn't make sense. $800k is not a small enough amount for any responsible investment fund to walk away from.
I wonder if maybe it was actually worth way less. I think he said they walked away from their $800k investment, but maybe that was at a much higher valuation. If it was only worth $80k I can see them not bothering.
The bigger reason is reputation. If Techcrunch posted an article saying, founder screwed out of acquisition by billion dollar VC, it wouldn't work out so well for the next founder considering that VC.