[whoisjuan]

Well, nothing surprising here. Element AI raised about 260MM, failed to create a revenue trajectory so it sold itself on the merits of its IP to ServiceNow for 230MM. Of course the founders and employees will get wiped out. Investors are first in line to get paid.

If you’re a founder and you ever are doing a big round try to seek for secondary liquidity. It’s fair for founders to have some way to build financial stability when they are sacrificing so much. Secondary liquidity terms are way common nowadays than they used to be.

Element AI founders should have done that when they did their Series B and raised 150MM.

I know there are some purists that think that giving founders secondary liquidity can remove certain accountability, but honestly if you’re investing in a group of people and you believe giving them some reasonable path to partial liquidity pre-exit, you probably have some fundamental doubts on that investment and that group of people. I feel that nowadays that’s basically a litmus test for investment strength.