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Comment by nlh | Hacker News Reader

One of the greatest quotes I've ever heard from a founder buddy was when his startup was going through a particularly dark moment and struggling: One of the investors said to him "Maybe you should seriously think about shutting down and giving us our money back", to which he replied:

"It's not your money anymore."

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Yeah, then the investors call a board meeting and bring in a new CEO to provide adult supervision after a 2/3rds vote. The give that guy more equity than you to keep the ship afloat. "It's not your company anymore."

Your daily reminder of the importance of maintaining board control.

Not realistic to maintain control past A unless you built a real rocketship. The board doesn’t usually want to run your company - they have enough other companies, some evidently better than yours as they don’t require this intervention.

> some evidently better than yours as they don’t require this intervention.

I’m not sure where that’s coming from.

Also plenty of companies out there have control past the A.

Most have voting control, subject to certain investor veto powers, after the A. Very few have it after the B.

Isn’t each round 10-20% to investors? Even in the worst case of Seed, A, and B at 20% each, founders still have 80% -> 64% -> 51% ?

And in the best case it’s just one series A taking ~15%, thus founders still have 85%

Each round carves out 10+% for employee options, on top of 10-30+% to investors (Seed can be anywhere from 10-30%, Series A is typically 20% to just the lead, Series B 10%+).

Equity ownership and voting control are also different things. After the B you commonly have 2 investors and an independent director on the board, alongside 1-2 founders.

It can get much worse. Companies can have multiple “seed” rounds. It may not be doing well enough for a real “A” round. The naming of the rounds doesn’t matter. Valuation at each round does. If your valuation goes lower from one round to the next (“down round”) you’ll give up more equity, diluting everyone else faster.

Can never happen, the guy who says that this ain't ur money no more has made sure that investors know their place on board, they r afterall just passive investors who r spreading risks around, even wework a company that has fucked up financials had to give their founder close to a billion dollars just for stepping down, as long as the founder is a majority stakeholder, he will always remain in control

I'm skeptical. It is rare for founders to maintain majority control past series A. Unless you are very successful, it doesn't happen.

Not VCs then.

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