Fun idea, but holy conflict of interest: the founders want to take an investment from this fund in order to get a personal cut of the fund's returns, but the other common holders (think early employees) want the fund that provides the best value to the company as a whole. Maybe there's a way to manage it, but otherwise this seems to put the founders on one side and early employees on the other.
As a founder myself, I would love to have exposure to the other startups in my investors' portfolio and more importantly, I want other founders to have exposure to my company!<p>Upside offers an attractive option to gain a small amount of exposure and to recognize the help that founders provide other founders. I know a number of other founders who have helped me get where I am, but unfortunately they don't have any exposure to our stock. Typically, the logistical headaches and liquidity needs would stop most people in their tracks but Upside simplifies that process substantially.<p>Regarding the conflict of interest concerns, I don't agree at all. I personally help the other founders in my network generously and most CEOs that I know are very generous with their time as well. To have a formal recognition of that would be awesome and if any of us are successful, it's nice to know that we played a tiny piece in it.<p>Compared to typical VC arrangements, Upside offers something new that aligns interests of everybody involved. It's an innovative approach to an old-style business and delivers real value to entrepreneurs.<p>Most importantly though: Founders should always pick a VC based on the partner with whom they'll be working. Kent is one of the best, smartest, hardest working, and most importantly fair and honest. Not all VCs are alike and Kent is a class act.<p>Full disclosure: Kent was on my board of directors and I endorse him so strongly that I am LP in Upside VC.
While the stated goal of this is "to build a really strong founder community", this structure looks like a marketing ploy designed to boost dealflow.<p>I can't help but question, however, whether it will bring <i>good</i> dealflow. As an entrepreneur, the notion that I could profit from the fund's success even if my own company fails is not at all attractive. Additionally, the fact that this structure offers a formal incentive to focus less than 110% on my own company would be a huge turn-off. The conflicts of interest abound.<p>Personally, I'd be wary of a founder who didn't recognize this and who wasn't concerned about the effects, perceived and real, of having a personal stake in the venture fund that had invested in his or her business. Incidentally, given the lackluster returns of the vast majority of venture funds, I'd also question said entrepreneur's savvy.
Its a neat idea, but I suspect its primarily value is in marketing and the actual number is limited. That being said, the fund gets interesting if there's a unquestioned fundmaker (a Dropbox / Pinterest / AirBnB / What's App); do founders want to pick the firm because they hope to get a small share of that upside?
I always thought it would makes sense for Entrepreneurs to join a shared pool to spread the risk around a bit. This way instead of 60-90% getting nothing when their startups fail, they can all share in the top successes. This fund is helping them do this, which seems like a good idea.
As a serial entrepreneur, I find this model very interesting. Nowadays I prefer to go it alone without outside capital, but there are times I wish I could pool my risk and upside with other vetted entrepreneurs.