Founder Collective

“I think we're being seen and I'm, I could be over extrapolating the last 20 deals that we've been involved in almost as an insurance policy. Where we're side by side, we're putting in 500 K or a million. There's been eight, nine million dollars going in, and T…”

“The CTO at some point up to 50 people, you're golden. And then at some point you go, actually we could bring in better, better technical skills. And if you've got a good co-founding CTO, that person becomes like a Swiss army knife and is deployed in different …”

“You know, these ten-year funds are taking 18 years.”

“Harry, we still own every last share in SeatGeek. That was an investment I made in 2010.”

“I've never turned it down. Never.”

“I think pro rata is generally not great for entrepreneurs. It's a call option against you.”

“We've never, ever led another round. So we have this view of like, it would be negative correlation bias. It would be unfair to everybody if we didn't be somewhat kind of uniform.”

“If we follow, our view would be we'd had, we would have had to have followed on in everything, and I think that the absolute return would be better. I don't think that the multiple would necessarily be better on the fund.”

“I think that that's the momentum business, and I think knowing how and when to get out quickly with some of those really, really matters, and that's not really my business. So my business is value, is getting involved early, and trying to find value opportunit…”

“Our knee joke tends to be when this has gotten across a certain point, like we're out of here and credit to Eric at a point for going like we've captured 80% of the value. We could capture another 20%.”

“And we're working for DPI, and the bigger we make the fund, the tougher it is on the DPI.”

“We have at our team meeting, I love it because dot dot dot. If you can't complete that sentence, you can't invest.”

“Even in your top names, sometimes taking 20% off the table, if you can return 25% of the fund, particularly if it's a newish fund, so if it's a, you know, if it's a twenty-twenty-four fund and you can give back 25%, like, why wouldn't you do that? And you're s…”

“You know, in retrospect, we probably sold a little too early, so this was early on, you know, this is a business that's getting close to ten billion dollars in valuation, and there's an opportunity to take some off the table, and you're very new.”

“Like we're so proud to be in both, but sooner, you know, sooner has been a very quick journey. So if you look at like how lower, how much lower the dilution is, part of it is just how quick the momentum of that has been versus a whoop, which is hardware took a…”

“A lot of them, like, have minimum size checks now, so we're too small for quite a few of them. It's like, if I can't put fifty million dollars to it, and I think there's, it just reflects the inflation of the entire environment, and there are a bunch that real…”

“I still see that the vast minority of the time. Like, I think it's easy to extrapolate and go, that's a trend, and I could be very Pollyannish about this, but for the most part, like, I see founders wanting to make it work.”

“And I think overall we've done a little better on second time founders who didn't do that great up front. They didn't, they did okay, right? It's life changing. Like the first million dollars is so life changing. But they're really hungry. They've learned some…”

“There was an arbitrage. There was a real arbitrage because the risk premium at the seed stage was way overstated. That has changed completely.”

“So Klaviyo loved Andrew, loved Ed, came to me first, came through Hugo van Furen, who also sent us Suno, and didn't do it because of the framework. And the framework allowed me to easily say no.”

“I turned down sooner when David Frankl at Founder Collective introduced me at The Seed. You know what the lesson was there? Really interesting. I hope Mikey's okay with me saying this. I'm sure he is. It was a 250 K check or a 200 K check. And so the ownership…”

“Founder Collective only does first checks. They never do any pro rata afterwards, period.”

“Fund one was a literally Zero reserve fund. We were, there was no follow on. Zero. Like when we said we were seed and pre-seed, that's exactly.”

“We owned roughly 12% at IPO.”

“If you're pitching to the engineering teams, typically they'll go, they will underestimate what you have built and go, we could build that every single situation.”

“We try to raise money for this business, Smalls, right? Doing fifty million ARR. Try to raise money in December. Nobody would look at us.”

“In that situation, I broke every rule under the sun, and we put in a hundred K check, right? I broke my rules. But we don't do that.”

“If I'm on your board, I can't write a hundred K check. I can't write a 500 K check anymore because you need my time and you need my interest.”

“The first thing that comes to mind is like Pinterest. The founders came to us and we had a conflict. We had a very strong associate in Zach Klein, who was the chairman of supply. We, we'd invested in supply. We couldn't make the investment.”

“I remember saying to my wife on Olo, this is done. We've lost a lot. This was pre-founder collective saying, we have lost our money. Like, Noah is never going to get there.”

“We did no reserves in fund one, zero.”

“Eric invests in Trade Desk as a follow on because nobody else was going to give them money.”

“We still have this kind of one-to-one reserve policy, but we actually struggle on our reserves, because a lot of the time, our good companies get bit up fast.”

“Running Tide, we just closed down the business. This was a carbon sequestration business, ag, literally ag in the ocean. Unbelievable business. We've got ten million dollars, and he's burning three million dollars a month.”

“But these founders get onto this treadmill, and it's just, it's almost impossible to slow this thing down. I think what they feel like is their, and their loyalty is to the team that they've put in place, their loyalty is to the last set of capital that still …”

“I would say generally founders who've had enormous, enormous success and exits come to the next opportunity with some degree of hubris. I speak about this personally. I sold my first business And I thought I could conquer anything. And they look at any vertica…”

“Well, I would disagree with Nick, because I would say, prefs are fundamental. Saying, you should give your investor your, their money back, right, before you kind of, you know distribute the spoils to everybody. I think that's a fair tenet.”

“Fund, our Fund Three is a 20 18 vintage. No DPI yet.”

“We've got an LOI in a vertical SaaS business right now. LOI. We haven't got, this is not there yet. The company's done tens of millions. It's got a good valuation. It's PE.”

“Fund returners, you need four or five good fund, good companies. If we sell four companies at two hundred fifty million dollars each, right, we can return a fund. If we sell 10 companies at a hundred million each, like, nobody cares about that, we can return a…”

“Trade Desk was a bigger outcome for us. Coupang returned the fund, right? Like if, and multiple times.”

“PillPack returned fund two.”

“Like if I think of the secondary we've had over our entire kind of, you know over a career, I can count it maybe on two hands.”

“The answer there typically has been with big distributions, with large positions, so fund movers, or it's half the fund, we distribute, and we say it's up to you. With smaller positions, when at IPOs, so desktop metal, for instance, it got to the point where i…”

“When I see those rounds at like 25 on a hundred, pretty much we're out. We're pretty much out. Again, team versus theme. So, you know, there are rare instances where we see someone who's just like, you cannot ignore, you wake up in the morning, you go, oh my g…”

“We look at a company and go, can we 10 X that? Can we 10 X? And if we can't, then we shouldn't invest.”

“But I think it's the most unfair feature of capitalism, Harry, is the most you can lose is all your money. The most you can make is three, you know, 3000 X, right, or unlimited. If you just look at that, it is such an unfair feature of capitalism, and my LPs m…”

“When I look at it and I go, I fell in love with a what? Like, I fell in love with a what, but I really didn't love the entrepreneur at the beginning, and I wasn't, you know, the chemistry wasn't there, that's a mistake.”

“No, not at all.”

“In fact, in an ideal situation when there's insane heat in something that we've gotten earlier, like that's a great moment to take secondary if you can.”

“Well, Trade Desk, I regret every single share I sold. Uber, I regret every single share I sold.”

“If you take, you know, less, 10% or less off the table, Nobody's gonna really mind too much.”

“We don't think about dilution much. We really don't. Our MO has been, we dilute alongside the founder. As a seed stage fund, we get involved at the beginning, and it's been a strategy, and we don't think about dilution.”

“So, Harry, I promise you, I imagine a lot of your time is like, oh, think about that fund, think about that partner, to the point that over 15 years we've operationalized this. Like our software, I don't care if you use Monday, Airtable, we use Airtable. But o…”

“The, every great decision was never binary. It was always weighing up scales, and I think getting to conviction is confusing for people because they listen to this and they go, oh, you were binary about that. Like, you knew unequivocally, and the truth was, li…”

“I have to, like, strong arm my partners into, like, putting five million dollars into a company.”

“We literally committed on the basis of a PowerPoint. And we worked on that deal with Founder Collective. So Eric Paley and I both sat on the board. And so we literally co-led the seed round together and then IA breached them three times before raising their Se…”

“If you're coming into a company as a senior executive and you have a CEO is bragging to you about how big their last round was in dollars and how big the post money was, ask to see the financials and compare those financials to what they're claiming in the van…”

“Never, not the last 20 years, has the most valuable company born in any single year, right, valuable as of now, been this in the theme that was hot in that year. It has not happened.”

“And I'll tell you another story, you know, with Trade Desk, one of the reasons we didn't raise a lot of money was, we were the last ones in, and people just thought it was played already in the programmatic advertising market. But one of the reasons we didn't …”