When long-time founders get together behind closed doors, inevitably the talk of compensation comes up. It is the most taboo thing to discuss and yet CEOs can’t help talking about it with their fellow founders. More than half of the founders I have invested in have asked for advice about ongoing compensation.
It used to be 10 years ago that I could write a $3 million or $4 million or $5 million [check] and that was called an A round, and that company probably had raised a few hundred thousand dollars from angels and maybe some seed funds, and I could get a lot of data on how companies were doing. I could talk to customers. I could look at customer retention. I could look at a startup’s marginal cost structure. I could talk to references of the founders. I could take my time and be thoughtful.
I will not invest in an uncapped note or SAFE. Please consider offering a reasonable valuation cap. If you don’t know what valuation cap to use, I’m happy to work with you on that. But don’t waste your time pitching me on an uncapped note or SAFE.
Yesterday I spoke with Meagan Loyst, associate at Lerer Hippau and the founder of GenZ VC. That video will be available soon, but in the meantime, Meagan wrote a fantastic blog post surrounding Gen Z consumer trends and themes.