Comments on: Are VC Payoffs Bad? http://www.texasstartupblog.com/2007/06/13/are-vc-payoffs-bad/ Spurring innovation and entrepreneurship. Fri, 19 Mar 2010 18:42:02 +0000 http://wordpress.org/?v=2.7 hourly 1 By: Alexander Muse http://www.texasstartupblog.com/2007/06/13/are-vc-payoffs-bad/#comment-132997 Alexander Muse Wed, 13 Jun 2007 17:01:56 +0000 http://www.texasstartupblog.com/2007/06/13/are-vc-payoffs-bad/#comment-132997 Thanks for your comments! Thanks for your comments!

]]> By: jeremy liew http://www.texasstartupblog.com/2007/06/13/are-vc-payoffs-bad/#comment-132985 jeremy liew Wed, 13 Jun 2007 16:51:09 +0000 http://www.texasstartupblog.com/2007/06/13/are-vc-payoffs-bad/#comment-132985 I’m a partner at Lightspeed Venture Partners and we have included a founder liquidity component to a small number of our recent financings. I certainly wouldn’t consider us third tier and neither would our LPs (my partners and I have funded companies such as Ciena, Blue Nile, Doubleclick, Brocade, Riverbed, Phone.com, Virsa, Rockyou etc - more at www.lightspeedvp.com). Typically the circumstances of the rounds that have had a founder liquidity component have included: 1. Companies that don’t require much capital where we want to increase our ownership stake above investing what makes sense to go into the company 2. Companies that have established meaningful progress and been “de-risked” to some extent 3. Founders who have personal needs for cash driven by an external event (eg moving the business to California from a lower cost part of the world, getting engaged/married, having a family). Typically these are founders in their 30s vs founders in their 20s I don’t consider these to be “bribes” or “payoffs” at all. When willing buyer meets willing seller I think thats called a marketplace. I have a great deal of admiration for Ron and we are co-investors in several deals. However, I have to respectfully disagree with him on this point. I posted about this topic on the Lightspeed blog in December - if you are interested you can click my name in this comment to read more I’m a partner at Lightspeed Venture Partners and we have included a founder liquidity component to a small number of our recent financings. I certainly wouldn’t consider us third tier and neither would our LPs (my partners and I have funded companies such as Ciena, Blue Nile, Doubleclick, Brocade, Riverbed, Phone.com, Virsa, Rockyou etc - more at http://www.lightspeedvp.com).

Typically the circumstances of the rounds that have had a founder liquidity component have included:

1. Companies that don’t require much capital where we want to increase our ownership stake above investing what makes sense to go into the company
2. Companies that have established meaningful progress and been “de-risked” to some extent
3. Founders who have personal needs for cash driven by an external event (eg moving the business to California from a lower cost part of the world, getting engaged/married, having a family). Typically these are founders in their 30s vs founders in their 20s

I don’t consider these to be “bribes” or “payoffs” at all. When willing buyer meets willing seller I think thats called a marketplace.

I have a great deal of admiration for Ron and we are co-investors in several deals. However, I have to respectfully disagree with him on this point.

I posted about this topic on the Lightspeed blog in December - if you are interested you can click my name in this comment to read more

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