Agreed - seems like the terms could potentially defer the top-quality companies (although most would be happy to have the $ in their pockets), while the start-fund structure makes it attractive to any stage.
I'd hope the money is elective though, as that would certainly solve the problem.
With YC/StartFund there's no cap, no discount. The terms won't be better than that, but there's nothing in the article about cap or discount, so we'll have to wait for more info to know whether the terms are the same or worse.
Actually, that isn't quite true anymore. I'm not sure I'm allowed to disclose those terms, since they aren't mine to disclose, but those have since changed.
I'm going to guess that they'd be crowing about it if they tried to match the no-cap/no-discount awesomeness of the StartFund. Still, huge move for them... It's a nice time to be early-stage!
Comments
How are these terms different than what goes on with YC and StartFund? Better or worse?
The $100k is a $3m cap with a 20% discount [0]
Assuming the companies seed round prices above $3m, it's an additional 4% dilution to the company (bringing total initial dilution to about 9%)
[0] http://www.readwriteweb.com/archives/techstars_nearly_matche...
Seems to introduce some signaling issues...
The stronger the company, the less likely they are to accept the note at a 3mm cap.
Agreed - seems like the terms could potentially defer the top-quality companies (although most would be happy to have the $ in their pockets), while the start-fund structure makes it attractive to any stage.
I'd hope the money is elective though, as that would certainly solve the problem.
Wow. $3mm cap with 20% discount is horrible; I don't know of anyone currently raising money on those terms. There has to be some mistake somewhere.
It's an "or," not an "and," I think. 3mm cap OR 20% discount, whichever is lower, but not both.
These are average standard terms for a first raise, pre-seed. This just allows companies to focus more on building instead of raising.
With YC/StartFund there's no cap, no discount. The terms won't be better than that, but there's nothing in the article about cap or discount, so we'll have to wait for more info to know whether the terms are the same or worse.
Actually, that isn't quite true anymore. I'm not sure I'm allowed to disclose those terms, since they aren't mine to disclose, but those have since changed.
I'm going to guess that they'd be crowing about it if they tried to match the no-cap/no-discount awesomeness of the StartFund. Still, huge move for them... It's a nice time to be early-stage!
At this point what does a another 5% do to harm you? 10% of nothing is still nothing, but 10% of something worth while is well... you get the idea.