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Comment by thruflo | Hacker News Reader

It’s very hard to align venture building with investability.

The more equity the venture builder takes, the less attractive the business. If the venture builder may need to be washed out, it puts early investors at risk of being washed out with it.

The less the people signing as exec founders on the investment agreement did to actually found the company, the less attractive the team. Evidencing the hustle to start the company is part of what sets a good founder apart.

It’s not so much that 20% of something is worse than 80% of nothing. It’s that the vehicle is compromised from day one.

You can mitigate this with traction but the model is a bit like trying to do a startup with one hand tied behind your back.

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There's a theory I have heard by the venture firm I am mentioning, which is that young smart and talented people are commonly locked inside some management consulting firm/elite career. They dont have the proper skill set (tech/startup) to start a company, but are highly capable. Funding those people (elite under grad, few years experience at McKinsey) can have a good outcome, and providing them a framework can lead to success.

But what you're saying is the very act of hustling to get a business off the ground is a positive indicator, and without it, makes the idea/company non investable. Furthermore, the equity breakdowns make it less of an attractive investment in future rounds??

Appreciate your comment, trying to read between the lines of it

Yes, exactly.

There are no absolutes but normally fundraising is hard and you need to get 99 ticks out of 100. So starting with `x`s built in makes it tough.

There’s definitely good people in academia and industry who could be great founders but need help cracking the “I can’t start a startup because I have money/life responsibilities” catch 22.

But ultimately if the people who really hustled the company into existence are not the people in the founding team, what confidence do you have that the founding team will raise the next funding round and the one after that without needing their hands held?

And if they have the personality to jump into other people’s vehicles then who’s to say they won’t jump out of this one when the going gets tough?

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