DON’T WASTE YOUR EQUITY

I’m a big fan of children’s literature. In terms of sage advice for entrepreneurs, it’s hard to top Aesop’s fable about the dog and his bone. And Dr. Seuss’s Yertle the Turtle can’t be beat for conveying an invaluable lesson about how to treat the other turtles in your pond.

But then there’s The Giving Tree. Some people view it as a beautiful tale of a tree’s selfless love. Who are they kidding? Shel Silverstein’s story about a tree that gives up everything it has to a self-centered boy is one of the most depressing children’s books ever. Unfortunately, it also happens to be a pretty accurate representation of many relationships between venture capitalists—the boy—and founders who give away more and more equity until there’s nothing left.

At our firm, we see this problem time and again. In