[Silhouette]

Surely if you're taking substantial funding you would expect the existing shareholders to give up part of their stake in the company though? The investors will want some equity and it has to come from somewhere. I don't quite understand what was different in the situation you described. Can you clarify?

[s1artibartfast]

Started with a split close to 25% per founder. VCs all wanted to see one founder with clear control, so the equity was rearranged closer to 70-10-10-10

[Silhouette]

That just seems strange. I can understand wanting to have one person who is the ultimate decision-maker for company policy and I can understand wanting to avoid a possibility of deadlock if founders disagree, but neither of those requires anything close to the extreme change you described. What founder in any startup that was established enough to be seeking VC funding would ever accept that kind of change?

[s1artibartfast]

Where I saw it was in the Healthcare field where several million of funding was required for series A and most of the founders were senior MDs and engineers having worked years on early development . When faced with choice between being highly unattractive for investment or being able to develop, they made the hard choice to put product over profit.

My point was mostly to shed light on the fact that most VCs want few founders and diffuse ownership can cause investment challenges.

[Silhouette]

OK, the economics will inevitably be different if you're not doing pure software work and also have some physical element or high regulatory barriers to entry. Maybe in those cases taking investment is the most likely way for most new businesses to become established.

But for pure software businesses my answer to your final paragraph would be "OK, so maybe you just bootstrap the business with a few good people and skip the VC part". If you aren't hiring hundreds of staff or buying up expensive cloud resources like they're about to run out regardless of how inefficient your product is, how many software startups could get by just fine with a real business model that actually makes money and some steady growth? Who says you have to have a pitch deck, a huge cash injection based on hope and high variance VC investment models, and one hand tied behind your back with investors holding the strings until the Big Exit(TM) or, more likely, the funding runs out before you have actually built a sustainable business and everything just gets shut down?