Entrepreneurship is a roller coaster. That’s before we even start talking pandemics, market crashes, and natural disasters (hello, 2020). A support network can be a safety net for founders in more ways than just financial.
The recently launched FounderPool
aims to de-risk startup founding by pooling equity and creating a community of founders mutually invested in each other's success.
While many people have talked about exploring startup risk diversification, nothing has taken off yet. Chandra Duggirala, the CEO of FounderPool, explains their approach below:
”You put a percentage of your equity into a pool alongside other founders you respect. All founders in a pool are invested in each other and are incentivized to help each other succeed. The most interesting thing about this is that you get exposure to a bunch of startups not by forking over cold, post-tax cash, but your common stock.”
The community seems to resonate with the idea with over 1,000 upvotes, together with 100 companies that have collectively raised $1+ Billion and joined the pool.
The benefits can exceed the purely financial, it works similar to insurance protecting you from losing it all. “Unfortunately, when startups fail, most founders can’t just start over. Responsibilities grow, opportunity costs mount, and your risk tolerance goes down fast. Many founders are forced to give up their dream and get back to a 9-5 job.”
This initiative looks promising. If you’re a VC-backed founder and you’re comfortable with up to a small piece of your equity in exchange for reduced risk, apply for an invite.