1) We screen companies based on their quality, ex: a round raised within the last 3-6 months. 2) Founders get to interact with participating companies and rank them based on their insight. Only companies that are highly ranked get into a pool. A pool is also dynamic and founders in the pool can invite new startups based on their interactions.

Overall, this is based on the concept that founders are often good judges of other founders/startups. And pool is more than just for risk diversification, they get a community of founders ready to help your startup because they are vested in it.

> a round raised within the last 3-6 months

If a company has raised capital and done so recently, how would you compare this to the founder selling an equivalent amount of their shares in into that round (secondary)?

IOW, if a founder has liquidity and a priced round, in which situations is this better or worse?

Priced round is for indexing the value of stock being assigned to the pool.

If the founder has liquidity, before joining the pool, he would be joining the pool right?

Or did I misunderstand?

My question was a little different. FounderPool provides a lot of diversification (relative to shares in 1 company) and potentially, earlier liquidity. But if I’m able to sell shares into a funding round, don’t I get that anyway?

I’d get cash rather than shares in a fund (and later, cash), but for someone interested in doing this, getting cash seems like the goal and is still investable elsewhere.

So, why not take the shares I’d contribute to FounderPool and sell them into my B round? If I want outsized exposure to a small set of equities other than my own, I could invest that cash in 10 smaller public equities and still get high-variance outcomes - maybe I pick a future Shopify, probably I don’t - but for someone after liquidity anyway, that part doesn’t seem like a feature.

If you can sell shares on the open market, that's certainly a win, but it's likely to occur until series C and many boards may block secondary market sales as it competes with the company's own ability to raise capital.

I would add a distinction that an additional screening step should be based not only on whether a round was raised but also who it was raised from.

Given that venture returns are distributed by Power Law and not normally distributed it doesn't make sense to treat all sources of funding as equal

Great idea and thanks for suggestion.

Does a startup's equity in the pool vest over time? I'd be concerned about a startup joining the pool, and then immediately dissolving their company.

Would vesting help? Instead of dissolving you just... wait. Pretend to build.

Good way to get oneself kicked out of the pool before fully vesting.

How do you legally kick them out?

Because of the condition for participation in the pool is that your stock should continue to vest, for the membership shares in the pool to continue to vest.

Wait so your startup has to continue to grow in order for you to be able to claim profits from the pool? Doesn't that defeat the purpose?

Yes, big concern here, so vesting happens over time.

This is a good point -- will the funding rounds also need to be qualified by only certain VCs being trusted to make good valuations? What "bar" of trustworthiness of VC will be honored?

While we go through a vetting process for all applicants, pools are ultimately formed through a peer-selection process based on ranking. The presence of top tier VC backers is one of several major factors a founder will rank with.

Great point. We think founders/builders make the best investors. They can sniff out failure. Selection is done through peer ranking by the applicants themselves. Top make it in.

So the founders need to research every potential company that could join their pool to figure out how to rank them? Seems like that takes a lot of time to do right.

we make it really easy to get the nuggets of information you need at a glance. You can only rank your top 10.