It’s my comment of the day, found at a Silicon Alley Insider article named “Hey, Look What Tumblr’s Done With All Its Money”. I have smirked reading this comment from Nicholas Carlson in response to “Anthony”. It reflects the stories I’ve heard from a bunch of start-ups of known identity, and honestly it seems to be often the way it goes.
The VCs told
- The Start-up ignores revenue.
- The Start-up is running out of cash.
- They ask a VC for cash in exchange for large handfuls of equity.The VC agree.
- Than founders ignore revenue more, again. Run out of cash, again.
- Shovel equity in VC’s direction, asking for more cash, again.
- Optional: repeat steps 1 through 5.
- The founders have to accept VC-picked board members.
- The Start-up stops ignoring revenue.
- The Start-up will be sell to other VC’s or at the friends at Google.
- Next Start-up is ringing the bell. Let’s start again at step 3.
It covers in some cases my assumption and personal observations, but hey! I guess it’s the normal reality and the way the cookie crumbles.