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David Cummings on Startups

Several years ago there was significant discussion around the pros and cons of entrepreneurs taking chips off the table. Taking chips off the table is another way of saying that the entrepreneur sells some of his or her equity before selling the entire business. Generally, the idea is that by putting some money away now, especially if it’s a decent amount, pressure is removed to sell the whole thing early and instead go for building a much larger business.

I’m a fan of entrepreneurs taking chips off the table for several reasons:

  • Having 99% of your assets tied up in one company creates pressure to take the first good offer that comes along
  • Spousal and family stress during the entrepreneurial journey can be partially alleviated when things like the house and college for the kids are completely secured
  • Investors that buy some of the entrepreneur’s equity show faith in the…

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