pursue venture capital

[chadwhitacre]

Over at gratipay/gratipay.com#239 we've been talking about what it would look like for Gittip to take venture capital in the context of a conversation with one firm. Here's a ticket to talk about the idea in general.

[chadwhitacre]

Here's a 101 resource I found on venture financing:

http://www.marsdd.com/entrepreneurship-101/money/

[chadwhitacre]

The idea on the table is that we would extend Teams so that any member could pay lump sums into the team. So you can contribute time, money or both. Monetary contributions would be shown on the members spreadsheet along with the amount you've taken back out. So an investor would pay in however much, sit for a few years, and then start drawing back out. We would show a timeline of pay ins/outs along with ROI.

@Changaco made a good point in IRC: If teams can accept money in this way, then what is the incentive to give money to the team in the "normal" way, as a no-strings-attached payment?

[dsernst]

As a founder who's worked with VCs in my previous startup, very skeptical how this would work out.

What sort of contracts do you imagine?

What are the VCs motivations here?

The incentives just don't seem aligned. They have a fiduciary duty to their LPs to pursue highest ROI possible. Their investors would have a strong case for suit if an MD used their funds' money "out of the goodness of their heart".

• If you think Gittip needs capital now, what about pursuing more of a loan to Gittip LLC?

I'd also ask how this fits in with the Open Company / generally transparent nature here? Is this sort of arrangement open to anyone?

If you're set on the structure of investment laid out here, this seems worth investigating: An open way to invest in the team. Anyone could make an upfront lumpsum payment to the team's coffers, in exchange for a payback that grows over time proportional to the size of that teams' weekly fund. Effectively buying a percentage of equity in the team. Still lots of details to work out: valuation, contractual obligations, voting power, etc

[chadwhitacre]

If teams can accept money in this way, then what is the incentive to give money to the team in the "normal" way, as a no-strings-attached payment?

Closing because of this. ^^^

[chadwhitacre]

With Gratipay 2.0, payments to teams are no longer no-strings attached. Reopening from #384.

[chadwhitacre]

From http://www.collaborativefund.com/about/alignment-holdings/:

https://www.omidyar.com/
http://www.knightfoundation.org/
http://casefoundation.org/
http://www.kaporcapital.com/

[mattbk]

Is Ambridge a Knight Foundation city? http://www.knightfoundation.org/about/communities/

[chadwhitacre]

Uh ... don't know much about that. Probably not? But maybe (probably) Pittsburgh is?

[mattbk]

Philadelphia is...

[chadwhitacre]

Looks like Pittsburgh isn't.

[chadwhitacre]

Seed venture capital and operational expertise for entrepreneurs building the Bottom Up Economy.

What's the Bottom Up Economy? Enabling small businesses and individual consumers and developers to more easily and cost effectively access technology, information and customers so that they can create, transact, communicate and grow.

http://www.homebrew.co/

via http://www.disruption.vc/blog/what-if-facebook-were-a-nonprofit

[chadwhitacre]

I've got a meeting with Aaron Tainter at AlphaLab this afternoon (follow-on from last Wednesday's event).

[chadwhitacre]

Good meeting, I felt like I was able to communicate what Gratipay is about. AlphaLab is an accelerator, a 20-week program (summer and winter sessions), with $25,000 for 5% of the company, plus another $25,000 (as a convertible note) if we raise another $50,000.

[chadwhitacre]

http://firstround.com/

[chadwhitacre]

If we do decide to pursue venture capital per #405 (comment), then #1033 may be a good launching point. The ideal scenario would be that we see an uptick following #948 #920 and therefore in a stronger position to pursue funding.

[chadwhitacre]

List of "enlightened investors" on https://www.zebrasunite.com/resources.

[chadwhitacre]

Especially interesting is http://www.indie.vc/. I know I've noticed that before, but apparently haven't noted it here. They make their money via payouts from revenue, not from liquidity events.

[chadwhitacre]

O'Reilly's behind it.

[chadwhitacre]

Indie.vc reticketed as #1034.

[chadwhitacre]

[I]t’s both tragic and amazing that the company, in all its handmade, anticapitalist, pro-composting glory, became significant enough for activist investors to bicker over it.

https://www.bloomberg.com/news/features/2017-05-18/the-barbarians-are-at-etsy-s-hand-hewn-responsibly-sourced-gates