Not surprisingly, they often get asked to code for equity instead of cash. Todd (Sampson) particularly wants to say yes but our group knows that doing so too easily leads to three scenarios:
- Bad: owning a pile of worthless stock in early stage deals that never happened.
- Worse: owning early stage stock in a phenomenal startup but not making any money because all the returns are derived from pro rata participation in later rounds.
- Terrible: making money solely via later pro rata participation as described in Worse, and therefore being an accomplice in crushing the Common, knocking down the Series A, and firing the Founder.
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Sawickipedia: Can’t wait to see how this develops for @toddsampson and @rafer & team. |
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