Ask HN: How to balance Equity when the Investor is also a Client?
1 comments
I would try, to the greatest extent possible, to avoid taking investment from a client.
There is a fundamental conflict of interest between customers, who want to pay you as little as possible in each transaction, and investors, who want you to earn as much as possible in each transaction.
If a person or entity is willing to pay your Saas business for something that will reduce their opex, that's great, but they're fundamentally a customer rather than an investor, and I wouldn't give them any equity.
There is a fundamental conflict of interest between customers, who want to pay you as little as possible in each transaction, and investors, who want you to earn as much as possible in each transaction.
If a person or entity is willing to pay your Saas business for something that will reduce their opex, that's great, but they're fundamentally a customer rather than an investor, and I wouldn't give them any equity.
I've seen several examples of startups where investors exchange funds for equity, but what about when the investor is also a client for the new business? You could just keep things separated, I know, but any other ideas to streamline the relationship?
Would it be reasonable exchanging funds for services (instead of equity) in a SaaS scenario where the new service will reduce investor/client's existing operational cost?
Many thanks for any insight.