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Terry McGuire on Aligning Interest & Equity Stakes

27 September 2016

Terry McGuire, Founding Partner, Polaris Partners discusses the importance of alignment of interests during the LAVCA Venture Investors NY Summit in September 2015 in New York, NY.

You want the founders to own as much possible, because then you automatically serve within alignment of interest

This content is made possible with support from Omidyar Network and Telefonica Open Future_.

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TRANSCRIPT

  • English
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  • Portuguese

Terry McGuire: Often times in venture capital, people think that they should buy as much as possible at the lowest price possible. That’s actually wrong in my book. My book is when you start a company, you want the founders to own as much possible, because then you automatically serve within alignment of interest. As what Bob says, we’ve done it through emails which is okay. “Does this still look good? Sure, let’s do this deal.” Of course, we’ve done it before so there’s a pattern we recognized. My goal is to make sure that the founders … As a venture capitalist, my goal is to make sure that the founders have a huge chunk of the company. There’s a lot of other guys and a lot of other venture firms that will go or say, “It’s a seed round. We’re going to put in X money and own 16% of the company.” That, to my book, is wrong. It’s a misalignment of interest. If we start with the right alignment of interest at the get-go, then you can prosper together. If you don’t prosper, you don’t prosper together as well.

Terry McGuire: Muchas veces en el venture capital, la gente cree que debería comprar tanto como le sea posible al menor precio posible. En realidad, eso está mal en mi libro. En mi opinión, al empezar una empresa, usted desea que los fundadores posean cuanto más les sea posible, porque, de esa forma, usted, automáticamente actúa de acuerdo con una alineación de intereses. Como dice Bob, lo hemos hecho a través de correos electrónicos, lo cual está bien. “¿Esto todavía se ve bien? Seguro, hagamos este trato”. Por supuesto, ya lo hemos hecho antes, por lo tanto, hay un patrón que nosotros reconocemos. Como venture capitalist, mi objetivo es asegurarme que los fundadores cuenten con una gran parte de la empresa. Existen muchos otros tipos y muchas otras firmas de VC que dirán que “es capital semilla, vamos a invertir una X cantidad de dinero y poseeremos el 16% de la empresa”. Eso, para mi, está mal. Es una desalineación del interés. Si comenzamos con la alineación adecuada del interés desde el primer momento, entonces, podremos prosperar juntos. Si usted no prospera, tampoco prosperará en conjunto.

Terry McGuire: Frequentemente em venture capital as pessoas pensam que deveriam comprar tanto quanto possível pelo menor preço possível. Na minha opinião, isso é realmente errado. Na minha opinião, ao iniciar uma empresa, você deseja que os sócios fundadores sejam os donos do máximo possível, porque então você automaticamente atua de acordo com um alinhamento de interesses. Pelo que Bob diz, nós já fizemos isso através de e-mails, o que está OK. “Isso ainda parece bom? Certo, vamos fechar esse negócio.” Claro, já fizemos isso antes; portanto, existe um padrão que reconhecemos. Como venture capitalist, meu objetivo é garantir que os sócios fundadores tenham uma grande fatia da empresa. Tem um monte de outros caras e muitas outros fundos de VC que vão entrar ou vão dizer, “isto é capital semente, vamos investir X valor e seremos proprietários de 16% da empresa.” Isso, na minha opinião, é errado. Isso é um desalinhamento de interesses. Se começamos com o alinhamento correto de interesses logo no início, então você pode prosperar junto. Se você não prospera, você também não vai prosperar junto.

Terry McGuire on Aligning Interest & Equity Stakes was last modified: May 18th, 2017 by Claudia Rosenbloom
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Methodology

LAVCA’s fourth annual list of Emerging Women Investors in Latin American Tech includes 135 junior- and mid-level investment professionals from Latin America-based firms, as well as from global firms with Latin America-dedicated investment teams.

Every year since 2016, LAVCA solicits nominations of top women investors in tech from the investment community. In 2018, complementing the peer nomination process, LAVCA reviewed the investment teams of all active Latin American VC funds. Our inaugural list of  Emerging Women Investors in Latin American Tech had 47 investors. The list has been constantly growing – from 87 investors featured in 2019, to 97 in 2020, and to 116 in 2021.

NOMINATE AN INVESTOR

This list is not exhaustive; if you know of a junior- or mid-level investment professional working on Latin American tech deals who should be on this list, contact [email protected]

TOP WOMEN INVESTING IN LATIN AMERICAN TECH

LAVCA’s companion list of Top Women Investors in Latin American Tech includes 140 senior-level women investment professionals who are deploying capital in early and growth stage tech deals.

About LAVCA

 

LAVCA is the Association for Private Capital Investment in Latin America, a not-for-profit membership organization dedicated to supporting the growth of private capital in Latin America and the Caribbean through research, education, networking and advocacy.

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