For founders and investors, it’s time for some ‘real talk’ about money

Consciously or not, founders’ attitudes toward money play an enormous role in how they run their startups. These attitudes shape whether to bet on a new line of business, how much to charge a customer, how to handle investor capital, even how to talk to employees about pay.

Not to mention the biggest decision of all: when (or if) to sell.

Picture a first-time founder who grew up with nothing, eating hot dogs every night for dinner because that’s all her family could afford — and imagine her startup takes off.

Compare that to another founder, running an identical startup in a parallel universe — except she went to private school and will one day inherit the big family house.

Now imagine some common startup scenarios: a recruit who asks for a few million in equity to join the company, an acquisition offer that makes the founders one percenters, or an employee insisting on flying business class on a long trip. Those two founders might see those situations much differently.

Despite this, it’s taboo for investors to ask about a founder’s own money, and for understandable reasons. Many founders worry about revealing they come from a background of less — not everyone has a mom and dad ready to pay rent in the quest to get “ramen profitable.”

It’s scary when you’re already in the vulnerable position of fundraising to consider making yourself more vulnerable by sharing that you have needs. It could be a relative who has medical bills, a parent who is in debt, a bank balance with no commas. Founders who come from difficult backgrounds shoulder so many other burdens — this stacks on another, and it feels safer to stay silent.

A founder’s attitude toward money becomes the dark matter of the startup universe. Its gravity pulls on companies, guiding founder choices, and yet we can never quite make it out.

If we can find a way to be transparent about this (and our fund tries to be an extremist on transparency in the name of building trust), it might help.

A frank discussion about money can especially help founders who are in need. Investors can alleviate financial pressures, long before an exit, freeing up the founder to focus on the business.

Doing so benefits investors as much as founders — after all, a company’s a lot more likely to succeed if its founder isn’t stressing about personal issues.

Why should we scale the “Great Wall of Finance?”

There’s a whole list of ways a VC can help a founder struggling with financial needs. At first, by investing enough that a founder can cover rent to work on the startup full time. Later, by increasing salary, committing to invest more money in case things go sideways with a future financing round. Or by offering the s-word: Secondary.

Investors will sometimes do so-called “secondary” transactions (i.e. buying shares from the founder instead of putting the money into the company in an ordinary “primary” investment).


  • To alleviate a founder’s fear of loss: “Hey, I made this thing, and it’s finally valuable! What if I end up with nothing?” It’s schmuck insurance.
  • To remove a founder’s financial distractions: “If I didn’t worry about my student loan bill every month I’d be a lot calmer.”
  • To sustain a founder’s drive: “This startup thing is already worth it! Let’s trek onward…”

One threshold moment to watch: when an early acquisition offer gives a founder their “first shot” to make enough money to pay for a house and a future venture. (This often follows the “Rule of 8,” where the first offer that gives a founder $8 million in the bank is the one that tempts them most.) This might be a moment for VCs to offer secondary.

If you feel burdened by your student debt, maybe we can help you (and we’ve seen secondary that pays off a founder’s credit cards). If you’re caring for an aging relative, we can talk through a solution. If you dream of making enough money to buy your parents a house, that dream will drive your choices.

Here’s the rub: To help you, we have to climb the Great Wall of Finance. As your investors, we need to know your attitudes toward money. How much do you have, generally speaking? How do you see your financial future? What do you expect?

When can you start that conversation with your VC? In theory, we investors — for whom fundraising conversations happen every single day — should make it safe for you. In the real world, where Twitter gives any bozo 280 characters, you may need to vet the situation, gingerly.

The egg toss approach

Are you shuddering at the thought of disclosing all this money stuff to your VCs?

Investors bring all kinds of voodoo to money matters. Some believe founders who take secondary aren’t committed. Others will beg you to take money off the table so they can buy more of your company, then accuse you of pulling a bank heist. There are VCs who might use your private details against you if they ever want to make a management change.

Personal money is taboo in part because founders have every reason to fear disclosing such vulnerable details to VCs. We VCs need to earn the right to know you.

Instead of barreling full-disclosure ahead, consider the egg toss approach, where you start with a little lob and gradually “throw” further and further.

Start with a personal fact or two, and watch whether the investor seems to care. Then share a more financial fact — for example, a founder once talked to me about a role model in her life, who took some money off the table, and that opened the door for us to ask her views on money (if, instead, your investor seems to press play on a mental playlist of preconceived notions, take note).

If the investor seems open, cross Go (that’s Monopoly Go, not AI Go), collect $200 and share a detail of your personal financial situation. You could talk about your parents’ professions and income when you grew up, how you handle your household budgeting, and where you like to spend your money or why you save.

If you feel safe, maybe it’s time to trust them with the Big Talk. This could be right before you accept investment terms. “Before we get into business together for a long time, do you want to understand how I think about my own money?”

You might end up talking about how much money you have — in savings, Ether or whatever — or if you’re in debt; how much you need to cover your “personal burn rate;” or even just what financial success means for you. Is it about zeroing out your debt, paying for your kid’s special medical needs or about never flying commercial again?

Move carefully — money is a strange trigger for people.

Since we started our fund, we’ve tried to have as honest a relationship as possible with the people we back. As a matter of principle, we want all founders in our portfolio to live sustainably, so they can think about the long term. After all, Snapchat didn’t become a $15 billion company by selling early to Facebook so Evan and Bobby could buy pads in the Hollywood Hills (and we’ve now done secondary even in some seed rounds, under certain conditions).

Discussions about founders’ economic backgrounds do happen today — it’s just that they happen (needlessly) awkwardly, and often too late. “Hey, private question. If I take this next funding round, how does that change the exit strategy? What if we get a $50 million offer in a few months, can I still sell the company?” It’s a strange fact of our business that it’s considered inappropriate for a founder to admit that he or she would be thrilled to earn millions of dollars for a couple of years work — that, somehow, they should only be content with much more.

You may want to consider having that conversation about money when the investment has fewer commas — because it only gets harder as the stakes rise.


Thank you to Sara, who is the first person who ever planted these questions in my head and whose wisdom on them is responsible for 150 percent of what I know; to Ted Wang, for telling me about the Rule of 8; and Bloomberg Beta’s portfolio founders, for reminding me about all the ways in which This is Hard. Written with help from Carmel DeAmicis.