“This is Paul Graham from Y Combinator. We’d like to fund you.”
“Ah … well … so … one of the co-founders isn’t here. I should probably ask him first. Let me call you back in five minutes.”
Let us say that you are Paul Graham. You know that this start-up has a great business case. All the 3 co-founders have impressive backgrounds, and are passionate action-oriented personalities. They have also divided the equity equally among them. Moreover, the terms of the investment sought are also reasonable.5
0 of 1 questions completed
You have already completed the case before. Hence you can not start it again.
Case is loading…
You must sign in or sign up to start the case.
You have to pass the previous Module’s case in order to start this case
0 of 1 questions answered correctly
Time has elapsed
You have reached 0 of 0 point(s), (0)
Earned Point(s): 0 of 0, (0)
0 Essay(s) Pending (Possible Point(s): 0)
The biggest issue with this start-up is: a lack of a clear leader. All the 3 co-founders have equally impressive qualifications, as well as equal equity in the start-up.
This may seem to be an non-issue to a less-discerning investor. But, in future, there will inevitably be matters where not all 3 people will see alike. This will lead to a slow decision-making, since no clear leader will be there to take a call and move ahead. The phone conversation at the beginning captures exactly such an instance!
So, an investor needs to weigh the risk and decide accordingly. In a few interactions, if the personal dynamics between the 3 co-founders seems poor, then the investment should be avoided!
Read more on this matter here.
1. Question10 point(s)
In your judgment is there any cause for concern here?CorrectIncorrect