A popular venture studio based out of NYC is like this. They take 60% of the equity from the start, and provide 1M in capital (which is decent amount). The narrative is that they provide significant guidance, follow on capital, etc. But in reality, none of their guidance or follow on capital comes through. For a first time founder its okay for a year, any longer and its really a financial disaster versus just working your way up the corporate ladder.
People have no idea how few startups really cash out, and how hard it is when you start from low equity percentages/have bad terms.
The horror stories usually dont arise until a startup is actually worth something and has a future. This is usually 2 years+ into the journey.
I think the typical founders doing this are actually just people that want to say they own a company at dinner parties.
People have no idea how few startups really cash out, and how hard it is when you start from low equity percentages/have bad terms.
The horror stories usually dont arise until a startup is actually worth something and has a future. This is usually 2 years+ into the journey.
I think the typical founders doing this are actually just people that want to say they own a company at dinner parties.