Jason M. LemkinCEO, SaaStr · Co-Founder of SaaStr AI, SaaStr Fund, Adobe Sign

The Winning Strategy: Either Buy All Shares or None - Why Less Doesn't Help

28 Aug 2023 · 1 min

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0:54

Jason M. Lemkin argues a binary investment strategy: when you identify a winning company, buy all available shares (or buy none); fractional, collaborative VC ownership (many firms each taking 15–20%) often fails to deliver proportional value to founders. The clip highlights tensions between ownership percentages and actual value derived from cap tables, and notes that privileged, well-connected founders may not need early VC involvement until later rounds.

Chapters

When you meet a winner. When you meet a winner, you buy all the shares. Now, if you can buy a quarter of the company, you buy a quarter of the company. If you can buy 2% of the company, you buy 2% of the company. But you either buy all of them or none. But buying less doesn't help, right? Without question, it's better for founders. The element of venture, that is, and I'm being binary, when it's of course more subtle than this, but every much of the collaboration in venture did not benefit founders, right? That means if you are connected. If you are connected, okay, and this is for the privileged. Okay, which we could talk about. But if you're connected, you might not never need a VC until series B. Like why would you deal with a bunch of collaborative VCs that all want to own 15 or 20% of your company when value is not consistent with ownership? Right? That's the underlying tension that we've been talking about for years, but we're realizing is we get value out of our cap table, we don't get value consistent with ownership.