In April of last year, Michael Grinich got a call most startup founders only dream about. Eric Vishria, a partner at Benchmark, one of the most prestigious VC firms, said he was interested in investing in Grinich’s then-two-year-old software startup, WorkOS, which helps other software startups sell their products to large companies. Grinich had a rare chance to join the firm’s portfolio of early bets, which previously included eBay, Twitter, Uber and Snap.
But Grinich had already received an investment offer from Lachy Groom, a former Stripe product manager who launched his first investment fund in early 2019. Groom asked to buy around 15% of WorkOS’s shares as part of his investment offer, which Benchmark said it wouldn’t match, according to people with direct knowledge of the deal. The firm usually wants to buy at least 20% of a company’s shares in order to generate big returns if the startup is able to go public or get acquired. Grinich picked the less-established Groom.