Item — HN Reader

http://blog.bootuplabs.com/2010/04/14/wertz-joins-board-firs...

I'm not really sure how I feel about this. It seems like they behaved pretty reasonably for a regular company, but as a fiduciary, they probably should have held off and not funded anyone without funds in the bank, vs. relying on a mid-term capital call. (I wonder who bailed on the capital call and why)

After this, I would probably be reluctant to move to Vancouver based on their line of credit promise unless I could see the funds in escrow; a LoC of $100k should mean $100k in an account I control, with equity going to them based on how much I withdraw. If they were Sequoia I'd be willing to accept a promise, but clearly how they have demonstrated they have pretty limited resources.

They at least seem fairly transparent about everything, so it's not dishonesty, merely bad judgment.

I'm also curious why 4/7 were cut -- was it that they were mediocre teams/products that Wertz didn't want to fund, or was it just that you ran out of money in the bridge period? It seems unlikely to me the latter, or you would have tried to structure some kind of bridge (or asked the teams to do this themselves by not drawing on the line of credit, which seems to be your only marginal cash expense per team). How else would you pick which companies to keep vs. eject?

I'm not trying to be a dick, but when you burn people (even unintentionally or with the best of intentions), it makes it harder for everyone else to do deals.