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MS

Michael Seibel

12/17/21

@ Y Combinator

Investors know that founders want high valuations and often leverage this by offering a desired valuation while asking for unfavorable terms.

Video

YC

Understanding Investor Terms & Incentives || Rookie Mistakes with Dalton Caldwell and Michael Seibel

@ Y Combinator

Understanding Investor Terms & Incentives || Rookie Mistakes with Dalton Caldwell and Michael Seibel

12/17/21

Related Takeaways

MS

Michael Seibel

05/07/22

@ Y Combinator

Investors often have different incentives than founders, which can lead to misalignment in priorities.

YC

Y Combinator Cast

08/23/24

@ Y Combinator

Investors often chase opportunities in startups, hoping to profit from future growth, which can lead to inflated valuations that may not be sustainable.

YC

Y Combinator Cast

06/21/24

@ Y Combinator

Founders often inflated their expectations, with some expecting seed rounds of ten million dollars, reflecting a trend of trying to keep up with other startups' valuations.

YC

Y Combinator Cast

12/17/21

@ Y Combinator

Nowadays, with an abundance of capital, investors have a greater incentive to convince founders they need more money, often using fear of not having enough as a tactic.

JL

Jessica Livingston

02/24/15

@ Y Combinator

Our investment terms were designed to be founder-friendly, avoiding the typical demands investors make, which reflects our commitment to supporting founders' best interests.

YC

Y Combinator Cast

12/17/21

@ Y Combinator

Smart founders recognize that investors have their own goals and incentives, and they should consider these when evaluating investment pitches instead of accepting them blindly.

YC

Y Combinator Cast

10/29/22

@ Y Combinator

Many founders are shocked when investors agree to simple terms like signing a SAFE without demanding board seats or pro-rata rights, which contrasts sharply with their previous experiences.

YC

Y Combinator Cast

10/29/22

@ Y Combinator

The venture capital industry often promotes the idea that founders need to raise money immediately, which can lead to poor decision-making and unfavorable terms for founders.

MS

Michael Seibel

12/17/21

@ Y Combinator

There are many terms in a funding deal that can negatively impact you, regardless of how high the valuation is.