www.paulgraham.com

APRIL 28, 2010

Some angel investors join together in syndicates. For example, VCs generally write it into the deal thatin any sale, they get their investment back first. Some VCsnow require that in any sale they get 4x their investment backbefore the common stock holders (that is, you) get anything, butthis is an abuse that should be resisted.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Tim Keane

APRIL 12, 2006

We don’t like them and would prefer not to be involved. If the investors ideal size is smaller than your need, you ought to ask about syndication. If they don’t like to syndicate, or don’t have a track record of doing it, you will want to consider your options. Preferred Stock is the most usual form of investment today.

Entrepreneur 60

Entrepreneur Sweat Equity Valuation Common Stock 60

www.paulgraham.com

APRIL 28, 2010

You give a startup money and they give you stock. Youllprobably get either preferred stock, which means stock with extrarights like getting your money back first in a sale, or convertibledebt, which means (on paper) youre lending the company money, andthe debt converts to stock at the next sufficiently big fundinground. [

Angel Investor 63

Angel Investor Syndicate Syndication Dilution 63