[imdsm]

> I'm not sure investors would be happy knowing their money is literally buying my time

Isn't that what most investments do in the beginning? Pay for the time for the idea to become a reality and give the founder(s) the ability to realise it?

[iqonik]

I agree to some extent, but normally they would expect there money to be spent on marketing etc. rather than to cover my household bills?

[brudgers]

In the context of a Hacker News discussion, there are really two types of investors worth distinguishing. The difference centers [or centres?] around the meaning of "startup".

In Silicon Valley, a startup is a company designed to grow fast and structured to take outside investment in exchange for equity [i.e. a Delaware C Corporation]. Everywhere else, to a first approximation, recent shifts in popular culture have made "startup" mostly synonymous with "new business": the local chamber of commerce will refer to new restaurants as startups and restaurant owners as founders. These "local" startups are organized to meet the needs of local investors and local investors focus on cash flow [in the US an S-corp or an LLC so as to avoid double taxation].

The difference in structure is reflected in a difference of investment management. Silicon Valley style investors achieve returns via capital gains. "Local" investors primarily try to achieve returns via dividends, profit distributions, etc.

To put it in perspective, the YC investment model [as a sub-type of the SV model] is exactly about covering living expenses to allow founders to do things that increase the value of the underlying equity. That includes activities such as raising additional funding to allow more of the same.

In contrast, a "local" investor may not want additional investment because growth increases the risk of failure or a drop in profitability.

Lastly, one of the advantages of a US C-Corp is the legal requirement that employees get paid a legal wage. It avoids situations like that mentioned.