...if founders own a majority of the company (control the board and majority of voting shares) after a seed round and then bootstrap and pay themselves $0 in order to reach key milestones, complete product demo, obtain first revenue, contracts..... .....how could the founders not be in a much better position afterward? They just increased the value of the company, avoided dilution, maintained (and increased) control, and can now require existing investors to reinvest in the next round otherwise they get diluted.
The founders can decide on paying themselves the deferred comp owed to them, their shares are worth much more now, etc. Now, if they fail to reach those milestone and need to panhandle the next round because they ran out of money and cant bootstrap, then they may have a problem. It depends on what they have-- if they are in a foot race with 8 other companies, they may have a big problem.
Louis Ross
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...if founders own a majority of the company (control the board and majority of voting shares) after a seed round and then bootstrap and pay themselves $0 in order to reach key milestones, complete product demo, obtain first revenue, contracts..... .....how could the founders not be in a much better position afterward? They just increased the value of the company, avoided dilution, maintained (and increased) control, and can now require existing investors to reinvest in the next round otherwise they get diluted.
The founders can decide on paying themselves the deferred comp owed to them, their shares are worth much more now, etc. Now, if they fail to reach those milestone and need to panhandle the next round because they ran out of money and cant bootstrap, then they may have a problem. It depends on what they have-- if they are in a foot race with 8 other companies, they may have a big problem.