thought some of your readers might be interested.

It's probably still there too since that website was around for such a long time.

I appreciate your transparency in sharing a bit more about your deal structures and approach towards entrepreneurs.

Thanks,
Beth

At True we take it one step further and strive for Founders to own control through 2 rounds. It doesn't always work out that way, but if you structure the A round properly there is a shot that it works. We like our mainstream Seed/A rounds to max out at 25% dilution, and seek less in our seed and super-seed deals. We lobby for option pools on the smaller side of market are incredibly transparent with Founders about our average ownerships across the 3 deal types that we do: super-seed, seed and “real.”

All of the firms in the disruptor class (True, FRC, Foundry, Spark, IA, USV, FC, Maples, and many others) get this equation, and pay sincere and dedicated attention to the Founder's equity position. This is a great thing.

Most of us (and esp the super-angels) have been Founders ourselves before (some many times) and it's no surprise that our products are more attractive to Founders b/c we understand what they need most (and importantly the stuff they don't need).

It's an exciting time in the ecosystem. Bubble or no-bubble, and just like the startups we fund, as long as we keep the customer (Founder) interests top of mind, the best entrepreneurs will keep selecting these deals as they are best designed for today's market.

As usual, these scenarios vary on a lot of factors, but all are possible and common for first-time entrepreneurs especially.

“prominent seed funds will outperform top-tier VC funds”.
I can't wait to see how this plays out!

Some former co-workers — extremely smart software types with a real vision, I thought — ran a startup for years, during which they spent almost all their time raising funds. Care with the cash was not enough to ever accumulate critical mass on the product side. The effort chewed through several hundreds of millions without a single sale. The startup guys were philosophical, but some resented having their opportunities hijacked by funding. The VCs just saw this as business as usual. They never had a very good idea of the real business they were investing in.

No wonder Buffet is famous for saying that he only invests in firms that an idiot can run, because someday, one will. The entrepreneurs had better be twice as smart as your average firm's leadership, because they have more challenges, more difficult challenges, and almost no margin for error.

And I agree with Roger's comments. For us, we have managed to build a diversified portfolio across the IT stack – infrastructure, B2B, SMB, and B2C. We also encourage all our angel investors to reserve for follows on and maintain that discipline in our fund.

Great post Chris.

Point being, that managed super angel funds offer a worse economic incentive to the partners and so they'll either start just managing their own capital/close off to outside investors (100% of gain instead of 20%) or they'll become/join a VC (20% gains on $100-200m fund).

p.s. agree whole-heartedly on the entrepreneur dynamic but feel like your USV, True etc. exception list will grow ever larger and this whole debate will end up in semantics.

Pardon my naivete, I'm curious as to which seed funds will give a startup that kind of money.

Y Combinator will give you around $20k for around 5%, which means you'd have to sell your entire company 2.5 times in order to raise a million dollars.

Further, if you're saying entrepreneurs are savvier, and using SiteAdvisor as an example of how you could have done things better, what seed funds back in 2005 would have given you a million dollars?

From your footnote, apparently none, so where's the evidence founders are smarter? There are simply more options now, because you can do more with less money as technology advances, as always.

Can you list any examples of companies that have been able to raise over a million dollars while giving up single-digit percentages of equity, like the 9% in your fabricated example?

This sounds like fantasyland to me, but you have far more knowledge in this area.