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Can we talk about a special kind of BS? Canadian “VC’s” funding companies based on milestones / tranches. Friends don’t let friends take these deals. Discuss. ... See MoreSee Less

Anders Rawlins, Rob Lane and 23 others like this

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Ian Andrew BellHow about VCs who don’t make their tranche payments even when there are no conditions? 🙂

4 days ago   ·  5

5 Replies

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Sydney WongFeel like there's a story behind this post..

4 days ago   ·  3
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Tony Abou-AssalehAt TitanFile we did something similar in our last angel financing round and it actually worked pretty good for us. Now had we not hit our milestones ... unthinkable ;)

4 days ago   ·  2
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Jason MorehouseI don't think its uniquely Canadian VC thing. Realistically once you accept VC, things will go sideways one way or the other if you keep missing the mark -- but agreed it wouldn't be my first choice, given the shorter timeline for correction.

4 days ago   ·  1

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Shaa DeeFriends don’t let friends deal with VCs period. Seek angel investors instead

4 days ago   ·  4

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David CrowThe only thing we know about most plans and the milestones in them, is that they won't come true. I do not like green eggs and ham. I do not like tranched deals Tom I am.

3 days ago   ·  13

6 Replies

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Tom WilliamsVC’s who do these deals are pretend VC’s. The asset class is high risk for high returns. When a fund is largely managed by bankers and private equity types, you get a lot of this garbage. Because for them, they’re just buying equity, not investing in entrepreneurs. But of course, entrepreneurs who take these deals are just sustaining these bottom feeding practices.

3 days ago   ·  3

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Varun MathurReading this, I am glad the market moved in 2017 with the advent of crypto-enabled global crowd funding. The moonshot ventures, the ones which every investor wants, are the ones most likely to raise through token sales now, and where they need the equity investor the least. Thus the flight to quality and reputation for every such equity investor has become increasingly important. Sub-par ventures will attract the sub-par investors and their sub-par practices. The world has discovered that access to money is no longer restricted to a certain region/or a certain network of people. Its like the horse driven carriage meets the automobile. It served its purpose wonderfully well during its times, and yes, a 100 years later we still have that as a novelty item -- but the primary means of travel is through the automobile for now. Global, crypto driven crowd funding was born in 2017, and where will it go over the next few years and how will it transform the early stage startup world ? We are entering an era of the entrepreneurs unlike anything the world has ever seen. Imagine a Facebook, owned 100% by a Zuckerberg, who got there just by selling tokens ?

3 days ago   ·  2

4 Replies

Varun Mathur

Raj SinghStartups are high-risk/high-reward, but that doesn’t mean that an investor shouldn’t do what she can to shift risk to the entrepreneur, who has also chosen to play that same high-risk/high-reward game. How much of the risk each party takes is a negotiation. As long as both sides understand and accept the implications of the deal, it’s a good deal. Problems arise when either the investor or the entrepreneur - or both - don’t understand the consequences of deal terms. In my experience, this occurs far more often with angel investors, who demand terms that hurt them and the company in the long run because they are too unsophisticated to foresee the problems ahead.

3 days ago
Raj Singh

Christopher PyperThe classic one I love: Meet this revenue milestone for us to invest which is so high you won’t need our investment at that point, but you will take it anyways for security. I wonder if there is a slang name for these types.

3 days ago   ·  3
Christopher Pyper

Ian Andrew BellBDC used to do tranche deals all the time. Then again, BDC used to do early stage investing.

1 day ago
Ian Andrew Bell

Eric KryskiFor those that don't know, here is a short piece as to why traunched deals aren't really any good for both parties. www.forbes.com/sites/entrepreneursorganization/2013/12/20/tranche-investing-will-kill-your-startu...

1 day ago   ·  2
Eric Kryski

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