October 5, 2022

What if You Could Give Start-Up Money to People, Not Companies?

The Libermans Company has raised money in two rounds that equal a little less than 3 percent of equity, and the share price in the second round gave it an implied valuation of $400 million, the brothers say.

One reason people are willing to invest in the Libermans is that they’ve already demonstrated entrepreneurial flair. They built an augmented reality start-up, Kernel AR, that they sold to Snap, the owner of Snapchat, in 2016. At Snap the siblings oversaw an animation studio and worked on 3-D Bitmoji, according to a 2018 Times article.

Governance is a tricky issue for the Libermans Company. Investors get a proportional share of whatever wealth the siblings create, but they don’t have any say over how they allocate their time and effort. They can’t demand a dividend, either. The Libermans decide when to disburse some cash, at which point all investors will get a proportional share of it.

Their concept is a lot better grounded than that of Mike Merrill, an entrepreneur who in 2008 divided himself into 100,000 shares and tried selling them for $1 apiece. As recounted in a hilarious article in Wired in 2013, Merrill gave investors voting power over his life decisions, including whether to have a vasectomy.

There’s some risk that the Libermans will take the money they raise and retire to the beach, since investors have no say. The siblings think they’ve solved that by limiting outside investors to a maximum of 10 percent ownership. Since they retain 90 percent, the Libermans would mostly hurt themselves by shirking their duties.

Daniil and David told me that their Humanism concept is a natural fit for Silicon Valley, where it’s already customary for angel investors and venture capitalists to pick investments based on faith in the entrepreneurs. “People, not projects” is a common mantra.

Article source: https://www.nytimes.com/2022/09/02/opinion/libermans-humanism.html

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