So far, 2025 has been a great year for watching new, must-see TV shows and movies on subscription services. But if you, like many of us, have more concurrent subscriptions than you care to admit, you’ll agree that keeping up with the latest each month is expensive. They may not cost as much as most of the tech we cover, but it adds up.
If you’re trying to cut down on your expenses, you might be able to do so while holding onto your precious subscriptions. Attempting to cancel your service is a good way to see if you’ll be offered a cheaper monthly rate to stick around. Outside of that, several services offer ongoing promos, some of which are even available to new and returning subscribers alike. Below, we’ve curated some of the best deals going on right now, so you can enjoy streaming your favorite show or movie for less than it would typically cost you.
Note: keep an eye out for free trials and student discounts
Most streaming services offer free trials that typically last from a week to a month, whether you sign up for an annual membership or just a monthly subscription. However, you will likely have to provide your credit card information in advance, and you will be charged once your trial is over, so make a note in your calendar if you don’t want to be charged.
Some streaming platforms offer student discounts. These include Hulu, Paramount Plus, YouTube TV, Amazon Prime, and more. You’ll have to prove your student eligibility through a sign-up form and typically be enrolled in an accredited Title IV college or university to take advantage of these deals.
Peacock is NBCUniversal’s streaming service, one that offers next-day programming from NBC (and Bravo). The platform also provides access to live sports programming, including Sunday Night Football and WWE, as well as movies and shows like The Wild Robot, Conclave, Wicked, Oppenheimer, Yellowstone, Teacup, The Office, Saturday Night Live, Rian Johnson’s Poker Face, and the forthcoming The Office spinoff, The Paper.
The platform currently offers two plans: an ad-supported Peacock Premium tier for $7.99 a month (or $79.99 a year) or the ad-free Peacock Premium Plus tier for $13.99 a month (or $139.99 a year). Only the latter lets you download content for offline viewing.
In terms of deals, things are pretty dry right now. You can grab a complimentary subscription when you sign up for a year of Instacart Plus ($99 annually or $9.99 a month). You can also get free access if you’re an Xfinity Internet customer with gigabit speeds or a Diamond or Platinum Rewards member. If you’re a first responder or a medical professional (and are alright with your credentials being verified by SheerID), you can get Peacock’s monthly plan for $3.99 per month, which is a nice perk.
The best Disney Plus deals
$11
This bundle comes with ads and grants access to all of the shows and movies available in Hulu’s and Disney Plus’ library.
With Disney Plus, you can stream a wide range of shows and movies, including Star Wars: Skeleton Crew, Deadpool & Wolverine, Andor, X-Men ‘97, Your Friendly Neighborhood Spider-Man, and Taylor Swift’s Eras Tour film. A monthly subscription currently costs $9.99 a month with ads or $15.99 a month without (or $159.99 annually). The $15.99 per month service includes Dolby Atmos sound, as well as the ability to download TV shows and movies on up to 10 devices.
For just a dollar more, Disney offers an ad-supported, $10.99-a-month Duo Basic subscription that brings together Disney Plus and Hulu. To enjoy an ad-free experience across both services, the cost is $19.99 per month.
There’s also the $16.99-a-month Disney Bundle Trio Basic bundle, which includes the ad-supported Hulu and ESPN Plus (paying $26.99 a month nets you the ad-free version of Hulu and Disney Plus, though ESPN will still have ads). That’s cheaper than subscribing to all three streaming services individually, and is the wisest route to take if you want all three.
That being said, there are other ways to save, particularly with carrier promos. Those currently on one of Verizon’s Unlimited plans, for instance, can get Disney Plus Trio Basic with ads for $10 a month instead of $16.99. If you already subscribe to Verizon’s existing Legacy bundle, you can also continue to enjoy ad-free Disney Plus, as well as ad-supported ESPN Plus and Hulu, for $15 per month ($6 off).
$10
Hulu grants access to originals like The Handmaid’s Tale, as well as non-Hulu content like Shogun, The Bear, Futurama, Say Nothing, and Alien: Romulus. T-Mobile also offering complementary access to the Hulu-ad supported plan when you maintain a qualifying Go5G Next line.
Hulu offers both ad-supported and ad-free plans. No matter which you buy, you’ll be able to access all of Hulu’s TV shows and movies on multiple devices, including originals like The Handmaid’s Tale and Sand Land, as well as other content, like Shogun, The Bear, Futurama, and The Veil. The service also allows two people to stream simultaneously, and you can have up to six user profiles. However, subscribing to the ad-free plan means you won’t have to deal with commercials; You’ll also be able to watch downloads offline.
The ad-supported plan currently costs $9.99 per month, while the ad-free plan costs $18.99 a month. Hulu also sells ad-free and ad-supported bundles that include Disney Plus and / or ESPN Plus, which are cheaper than subscribing to each service individually. With the Hulu with Live TV, Disney Plus, and ESPN Plus bundle, you’ll be able to access more than 90 live sports, news, and entertainment channels, as well as content from each of the streaming services. You’ll also be able to record live shows with unlimited DVR storage and take advantage of the same features the standard, ad-free, and ad-supported Hulu plans offer. The ad-supported Hulu with Live TV subscription is $82.99 a month, while the ad-free tier is $95.99 a month (though, it’s worth noting that, of the three services included, ESPN Plus will still have ads, even at this tier). Complicated, right?
However, if you just want Hulu and don’t need the live TV version, you can subscribe to the ad-supported Disney Bundle Duo Basic, which includes Disney Plus, for $10.99 a month. You can also add ESPN Plus for $16.99 per month, or get rid of ads and add live sports for $26.99 a month.
In terms of deals, students can subscribe to the ad-supported version for $1.99 a month or a bundle that combines Spotify Premium, Showtime, and ad-supported Hulu for $5.99 a month. Some wireless carriers are also offering customers discounts when they buy premium phone plans. As mentioned previously, those currently on one of Verizon’s Unlimited plans can get the Disney Plus Trio Basic with ads for $10 per month instead of $16.99. If you already subscribe to Verizon’s Legacy bundle, you can also continue to stream ad-free Disney Plus and ad-supported ESPN Plus / Hulu for $15 a month ($6 off). T-Mobile, meanwhile, is offers complimentary access to Hulu’s ad-supported tier when you maintain a qualifying Go5G Next line.
$23
Sling TV is a live TV streaming service featuring live and on-demand TV channels like CNN, Fox, NBC, Comedy Central, Cartoon Network, and more. It’s half off for your first month, if you aren’t already a subscriber.
Sling TV is a streaming service that functions as a more affordable alternative to YouTube TV and Hulu with Live TV. With it, you can watch a range of streaming services as well as live and on-demand channels — including ESPN, CNN, Fox, NBC, Comedy Central, and Cartoon Network — on multiple devices.
Sling offers an ad-supported free tier — Sling Freestream — which provides access to more than 500 live channels as well as more than 40,000 on-demand movies and TV shows. The platform also offers three paid plans, all of which come with 50 hours of DVR storage: Sling Blue ($50.99 a month); Sling Orange ($45.99 a month); and Sling Orange and Blue ($65.99 a month). Sling also lets you subscribe to Max as a Blue-tier add-on for a discount (totaling $57.97 per month), or you can buy an ad-free subscription to Max as a standalone service for $16.99 a month. For a limited time, Sling is including a one-month trial to AMC Plus with subscriptions — perfect if you’ve never seen Halt and Catch Fire.
If you’re into sports, you may want to opt for Sling Orange over Blue as it grants access to ESPN channels — but only on one device. Sling Blue, however, offers a number of channels Sling Orange lacks, including Fox News, MSNBC, E!, Discovery, Bravo, and local NBC or Fox affiliates. You can also subscribe to a bundle that includes both Sling Orange and Sling Blue, which offers all the channels featured in the first two plans.
Sling is currently offering new customers a 50 percent discount on their first month of Sling Orange, meaning you’ll pay $23 instead of $45.99. The promo also applies to Sling Blue, although it’s slightly more expensive at $25.50, down from $50.99. You can also get one month of Sling Orange and Sling Blue combined for $33 per month instead of $65.99. In addition to 50 percent off your first month, Sling is also offering free unlimited DVR during that period, along with a $5 discount on Paramount Plus with Showtime, AMC Plus, or Starz.
The best Apple TV Plus deals
$10
Apple’s streaming service has a variety of original programming, including live MLB games and standouts like Severance, Ted Lasso, Silo, and Coda. A subscription normally runs $9.99 per month with a seven-day free trial.
Apple TV Plus is a service operated by Apple that offers original shows and movies in 4K HDR, including Ted Lasso, The Studio, The Morning Show, Silo, Severance, Finch, Coda, For All Mankind, and Napoleon. The platform is also the streaming home to Major League Soccer, and currently costs $9.99 a month. There are no ads whatsoever on Apple TV Plus, except some skippable pre-roll advertisements for other Apple TV Plus content.
There are a couple of promos to make note of when it comes to Apple TV Plus. The service currently offers a weeklong free trial for new subscribers, after which you’ll be charged $9.99 a month. You can also get a free three-month subscription when you buy an Apple device, though you’ll have to redeem the offer within 90 days of purchase.
Apple TV Plus is also included in the larger Apple One suite of apps. The all-in-one service lets you bundle four other Apple services for a single monthly subscription starting at $19.95 a month. New subscribers will get a free month of Apple TV Plus if they include it as part of their Apple One membership. In addition, eligible individuals who sign up for the student Apple Music subscription, which starts at $5.99 per month, can get Apple Music for 50 percent off with a free Apple TV Plus subscription.
As far as carrier deals go, T-Mobile offers discounts on Apple TV Plus, as well as other streaming services. For instance, the wireless carrier is currently offering customers in the US complimentary access to Apple TV Plus when they subscribe to a qualifying Go5G Next line. For Verizon Unlimited customers, the option exists to get Apple One (which includes Apple TV Plus) for $10 per month ($9.95 off) for an individual plan, or $20 for a family plan ($5.95 off).
$17
Max provides access to shows like Furiosa: A Mad Max Saga, Dune: Prophecy, The Last of Us, The Penguin, — as well as films like Barbie and Dune — starting at $9.99 a month. AT&T offers complimentary access to the ad-free Max tier when you subscribe to a select AT&T Unlimited Choice or Plus plan, which starts at $60 per month.
Max, which will soon be rebranded as HBO Max this summer, is home to Game of Thrones and its spinoff, House of the Dragon, along with shows and movies like Furiosa: A Mad Max Saga, Dune: Prophecy, The Last of Us, Wonka, Euphoria, Hacks, Scavenger’s Reign, The Batman, Succession, and even content from Discovery Plus.
The platform offers an ad-supported tier that costs $9.99 a month and two ad-free plans that start at $16.99 a month. Unlike the ad-supported plan, the standard ad-free tier also lets you download 30 shows or movies for offline viewing. Max also offers a $20.99-a-month Premium plan, which allows you to stream in 4K and supports Dolby Atmos with select content. The latter plan also lets you stream on four devices simultaneously and download a maximum of 100 shows or movies to watch on the go.
Max offers an annual subscription and various bundles, both of which are cheaper than subscribing on a monthly basis. The ad-supported plan normally costs $99.99 a year, saving you a modest $19 over the course of 12 months, while subscribing to the annual ad-free base plan for $169.99 saves you $33. You can also save about $41 by subscribing to the annual 4K Premium ad-free plan for $209.99. Lastly, you can opt for the ad-supported bundle — which includes Max, Disney Plus, and Hulu — for $16.99 a month, or pay $13 extra to go ad-free. The total cost is cheaper than subscribing to each of the three individually, saving you money in the long run. A basic plan exists, with ads, for $9.99 per month.
Multiple wireless carriers are offering deals. You can, for instance, get a year of Netflix and Max when you purchase a 5G Home Plus, LTE Home Plus, Fios 1 Gig, or the Fios 2 Gig Verizon Home Internet (VHI) plan. Alternatively, Verizon is offering those with an Unlimited plan the ability to get Netflix and Max (with ads) for $10 a month (about $7 off).
AT&T also includes complimentary access to ad-free Max when you subscribe to select AT&T Unlimited Choice or Plus plans, which start at $60 a month. If you opt for Cricket’s Unlimited Plus 15GB Mobile Hotspot phone plan, which starts at $60 a month, you’ll also be able to get the ad-supported version of Max for free. Finally, you can get two months of Max free with DirectTV Stream or Satellite TV services.
$8
The well-known streaming service offers individual subscriptions starting at $7.99 a month as well as more premium tiers that allow for 4K resolution and additional users. T-Mobile is offering the ad-supported plan for free those on qualifying Go5G Next, Go5G Plus, and Magenta Max lines. This deal is also available to those on two or more qualifying Go56 and Magenta lines.
A Netflix subscription grants you access to thousands of movies and TV shows, as well as a limited number of mobile games. Notable shows and movies include Squid Game, Dan Da Dan, Baby Reindeer, The Witcher: Sirens of the Deep, Cobra Kai, Stranger Things, The Killer, and Arcane, among countless others.
The well-known streaming service currently offers three plans: Standard with ads ($7.99 per month), Standard without ads ($17.99 per month), and Premium ($24.99 per month). The premium tier allows for higher resolution, lets multiple users watch content on four devices at the same time as opposed to just two, and lets you download on six devices at a time as opposed to just two. It’s also the only plan that supports 4K HDR content, as well as spatial audio.
Netflix isn’t currently offering a discount, but T-Mobile is offering the ad-supported plan for free to those on qualifying Go5G Next and Go5G Plus lines. This deal is also available to those on qualifying Magenta Max lines, or for those who sign up to two or more Go56 and Magenta lines. As mentioned previously, you can also get a year of both Netflix and Max when you purchase one of the following Verizon Home internet plans: a 5G Home Plus, LTE Home Plus, Fios 1 Gig, or the Fios 2 Gig Verizon Home Internet (VHI) plan. Alternatively, Verizon is offering those with an Unlimited plan the ability to get Netflix and Max (with ads) for $10 per month ($6.98 off).
The best YouTube TV deals
YouTube TV grants subscribers access to live sports and a number of major news and entertainment channels, including PBS, Comedy Central, Nickelodeon, NBC, ABC, Fox, CNN, and more. It also comes with unlimited recording for a maximum of six accounts, all for $82.99 per month. You can buy optional add-ons as well, which range between $2 and $65 a month and include access to services like Max, Starz, and NBA League Pass. The service also offers a separate Spanish-only plan.
Now through July 31st, new subscribers can sign up for the YouTube TV Base Plan for $59.99 ($23 off) a month for the first two months. It’ll be free for 21 days as a trial.
The best Paramount Plus and Showtime deals
$8
The ad-supported Paramount Plus Essential plan provides access to a wide variety of shows and films, including Tales of the Teenage Mutant Ninja Turtles, the entire Yellowstone catalog, Top Gun: Maverick, and Bob Marley: One Love. Walmart Plus members can currently get it for free as a part of their plan.
Paramount Plus and Showtime provides access to live sports and 24/7 live news with CBS News. It also grants access to the entire Paramount Plus catalog, including shows like Tales of the Teenage Mutant Ninja Turtles and Yellowstone spinoff 1923, as well as films like Gladiator II and Top Gun: Maverick. You’ll also get access to Showtime’s library, which includes originals like Billions, Dexter: Resurrection, and Yellowjackets, as well as movies like Talk To Me and Past Lives.
If you want to subscribe to both Paramount Plus and Showtime, you can sign up for the ad-free Paramount Plus with Showtime package for $12.99 a month (it comes with a one-week trial). Alternatively, if you’re willing to pay upfront, you can save about $36 over the course of a year when you subscribe to the annual plan for $119.99 per year.
Alternatively, you can subscribe to Paramount Plus as a standalone service when you pay for Paramount Plus’ ad-supported Essential plan, which costs $7.99 per month (it, too, comes with a one-week trial for new subscribers). The annual plan, meanwhile, costs $59.99 per year, saving you $36 over the course of 12 months if you’re willing to pay upfront. Just bear in mind this plan offers fewer live sporting events than the Paramount Plus with Showtime package, and won’t let you download content for offline viewing.
In terms of deals, Walmart Plus subscribers can currently get the Essential plan for free as part of their subscription. College students can also subscribe to the Essential plan for $5.99 ($2 off) a month, while seniors with an AARP membership can get a 10 percent discount on the Essential plan or Paramount Plus with Showtime plan. Lastly, military members can get a 50 percent discount on a year of the Essential or Paramount Plus with Showtime plans.
$18
With Starz, you can stream movies like Asteroid City and Jurassic Park, as well as original shows like Outlander. Currently, the platform only offers one ad-free plan, which typically costs $10.99 a month.
With Starz, you can stream a variety of shows and movies, including John Wick: Chapter 4, M3GAN, and Asteroid City, as well as originals like Outlander and Sweetpea. The platform offers a single ad-free plan for $10.99 per month, which allows you to stream on up to four devices simultaneously and download content for offline viewing. Right now, however, new subscribers can get three months of Starz for $4.99 per month. Alternatively, you can sign up for a six-month plan for $17.99, a savings of $28.
The best Amazon Prime Video deals
$9
Amazon Prime members can take advantage of faster delivery as well as an assortment of other benefits. This includes Amazon Prime Video, which encompasses a wide range of movies, some live content, and shows like The Lord of the Rings: The Rings of Power. Customers of Metro By T-Mobile’s unlimited plan can get a free Amazon Prime membership, which provides access to Prime Video for free.
Amazon Prime Video is an on-demand streaming service owned by Amazon. Its library includes a range of movies, some live content, and shows like Fallout, The Lord of the Rings: The Rings of Power, The Boys, The Marvelous Mrs. Maisel, and more. Through the service, you can watch certain titles in 4K and take advantage of deals on rentals and purchases not included in the subscription. There’s also an option to add extra channels with Prime Video channels, or go ad-free for an additional $2.99 a month.
Amazon Prime Video is included with an Amazon Prime membership, though you can sign up for the service without a membership for $8.99 a month with ads or $11.98 without. Right now, customers of Metro By T-Mobile’s unlimited plan can also get a free Amazon Prime membership, which provides access to Prime Video and other benefits, for free.
Update, June 4th: Adjusted relevant pricing details, removed a Peacock promotion that was expired.
Source link
#streaming #service #deals #June
![Mercor’s Brendan Foody calls out Sequoia over ‘dual-pricing’ valuation tricks | TechCrunch
In recent days, founders and founders-turned-investors took to X to share horror stories about being mistreated by VCs. Their complaints ranged from VCs falling asleep during pitch meetings to investors suggesting a founder fire a co-founder.
Brendan Foody, co-founder of the AI talent platform Mercor, which was last valued at billion, went so far as to call out Sequoia, arguably one of the most elite VC firms in the world.
“The “sequoia scam” is worse than a single horror story,” Foody wrote on X. “in the last 6 [months] ive seen a half dozen rounds where sequoia invests in 2 tranches. everyone pretends they only did the higher valuation. founders misrepresent this to their employees & then shop it to angels too.”
TechCrunch has previously reported on VCs investing in the same round at different valuations. Under this mechanism, the lead VC firm invests a significant chunk of its capital at a lower, preferential valuation, while putting a much smaller portion of capital in at a drastically higher price. The massive “headline” valuation that gets announced manufactures the perception of a dominant market winner, masking the fact that the lead investor’s actual average entry price was significantly lower.
The disparity can be stark. For example, when the AI-driven IT helpdesk startup Serval announced a million Series B at a billion valuation, the announcement didn’t tell the whole story. According to The Wall Street Journal, Sequoia’s actual lowest entry point valued the company at just 0 million — less than half the headline figure. The gap between those two numbers is the gap between perception and reality that Foody is pointing at.
Serval isn’t alone. At Aaru, a startup that uses AI to simulate user behavior for market research, lead investor Redpoint backed the company at a 0 million valuation despite an announced billion headline price.
Sequoia’s Shaun Maguire pushed back on Foody’s characterization directly. “TBH I have seen some of this behavior but I think it’s unfair to call it the ‘Sequoia scam,’” Maguire wrote in response to Foody on X. “This has happened approximately five times during my seven years at Sequoia. What happens is other investors are willing to pay a high price for a hot company — usually AI — at multiples above what we’re willing to pay. So we try to decouple the company-building relationship with our partner from the capital, and this leads to two tranches at different valuations in close succession.
“I’m not aware of anything shady here,” Maguire continued, “but if you’ve seen it I’d love to know. VC is a repeated game, so it just doesn’t make sense for us to try to mislead people. And if anyone has, I’d love to know. And in general, congrats on the success of Mercor — it was a miss for us.”
Maguire’s response frames the practice as a market reality rather than a deliberate maneuver — Sequoia, he suggests, is simply unwilling to pay what competitors will pay for the hottest deals, so it structures its participation differently. Whether that explanation fully holds up depends on a question Maguire doesn’t address: what founders are telling the people who don’t already know about the lower tranche.
Although Sequoia appears to use this pricing mechanism most frequently, Foody acknowledged it isn’t the only firm using this tactic. And while the dual-pricing structures certainly inflate a startup’s perceived worth and help attract top talent, calling the practice a “scam” may be going too far.
That’s because employee stock options should theoretically be priced based on the blended value of all tranches — not the headline number — according to Jason Woo, partner in valuation and financial modeling at Armanino, whose firm provides the independent 409A appraisals startups use to set option prices. A 409A is supposed to reflect a company’s fair market value, giving employees a strike price that’s insulated from whatever valuation gets announced in a press release.
There’s a catch: 409A valuations are widely understood to skew low. Because a lower strike price means a smaller tax bill for the company, there is a structural incentive to keep that number down. The appraisal that’s supposed to protect employees from an inflated headline valuation is also, by design, not trying particularly hard to reach the top of the range.
The angel question is more complicated. Unlike employees, angels are writing checks, not receiving options. There is no independent appraiser standing between an angel investor and whatever number a founder chooses to share.
The dual-pricing structure is just one of way VCs and founders game the perception of success in a hyper-competitive market. Another, more pervasive tactic involves manipulating or outright overstating annual recurring revenue (ARR).
The VC Niko Bonatsos, a longtime veteran of General Catalyst who more recently founded Verdict Capital, addressed this issue during one of TechCrunch’s events in Athens last month. “We [at Verdict] mostly invest before metrics, before product, before the company [has fully taken shape] but I do have a past portfolio, and sometimes the conversations are telling. I’ll get a call or an email with a very high ARR number. I’ll think: I didn’t remember that company doing so well. So I reach out to the founder: ‘What happened? Why are the numbers so strong?’ And the answer is: ‘Oh yeah, it’s 365 times the revenue we made yesterday because one of our campaigns hit.’ So yeah, some of these terms have lost meaning.”
Foody declined to comment further. Sequoia didn’t immediately respond to a request for comment.
— With additional reporting from Connie Loizos
When you purchase through links in our articles, we may earn a small commission. This doesn’t affect our editorial independence.#Mercors #Brendan #Foody #calls #Sequoia #dualpricing #valuation #tricks #TechCrunchMercor,Sequoia Partners,Valuations](https://i2.wp.com/techcrunch.com/wp-content/uploads/2024/11/GettyImages-1258486979.jpg?w=1024&ssl=1 "Mercor’s Brendan Foody calls out Sequoia over ‘dual-pricing’ valuation tricks | TechCrunch
In recent days, founders and founders-turned-investors took to X to share horror stories about being mistreated by VCs. Their complaints ranged from VCs falling asleep during pitch meetings to investors suggesting a founder fire a co-founder.
Brendan Foody, co-founder of the AI talent platform Mercor, which was last valued at billion, went so far as to call out Sequoia, arguably one of the most elite VC firms in the world.
“The “sequoia scam” is worse than a single horror story,” Foody wrote on X. “in the last 6 [months] ive seen a half dozen rounds where sequoia invests in 2 tranches. everyone pretends they only did the higher valuation. founders misrepresent this to their employees & then shop it to angels too.”
TechCrunch has previously reported on VCs investing in the same round at different valuations. Under this mechanism, the lead VC firm invests a significant chunk of its capital at a lower, preferential valuation, while putting a much smaller portion of capital in at a drastically higher price. The massive “headline” valuation that gets announced manufactures the perception of a dominant market winner, masking the fact that the lead investor’s actual average entry price was significantly lower.
The disparity can be stark. For example, when the AI-driven IT helpdesk startup Serval announced a million Series B at a billion valuation, the announcement didn’t tell the whole story. According to The Wall Street Journal, Sequoia’s actual lowest entry point valued the company at just 0 million — less than half the headline figure. The gap between those two numbers is the gap between perception and reality that Foody is pointing at.
Serval isn’t alone. At Aaru, a startup that uses AI to simulate user behavior for market research, lead investor Redpoint backed the company at a 0 million valuation despite an announced billion headline price.
Sequoia’s Shaun Maguire pushed back on Foody’s characterization directly. “TBH I have seen some of this behavior but I think it’s unfair to call it the ‘Sequoia scam,’” Maguire wrote in response to Foody on X. “This has happened approximately five times during my seven years at Sequoia. What happens is other investors are willing to pay a high price for a hot company — usually AI — at multiples above what we’re willing to pay. So we try to decouple the company-building relationship with our partner from the capital, and this leads to two tranches at different valuations in close succession.
“I’m not aware of anything shady here,” Maguire continued, “but if you’ve seen it I’d love to know. VC is a repeated game, so it just doesn’t make sense for us to try to mislead people. And if anyone has, I’d love to know. And in general, congrats on the success of Mercor — it was a miss for us.”
Maguire’s response frames the practice as a market reality rather than a deliberate maneuver — Sequoia, he suggests, is simply unwilling to pay what competitors will pay for the hottest deals, so it structures its participation differently. Whether that explanation fully holds up depends on a question Maguire doesn’t address: what founders are telling the people who don’t already know about the lower tranche.
Although Sequoia appears to use this pricing mechanism most frequently, Foody acknowledged it isn’t the only firm using this tactic. And while the dual-pricing structures certainly inflate a startup’s perceived worth and help attract top talent, calling the practice a “scam” may be going too far.
That’s because employee stock options should theoretically be priced based on the blended value of all tranches — not the headline number — according to Jason Woo, partner in valuation and financial modeling at Armanino, whose firm provides the independent 409A appraisals startups use to set option prices. A 409A is supposed to reflect a company’s fair market value, giving employees a strike price that’s insulated from whatever valuation gets announced in a press release.
There’s a catch: 409A valuations are widely understood to skew low. Because a lower strike price means a smaller tax bill for the company, there is a structural incentive to keep that number down. The appraisal that’s supposed to protect employees from an inflated headline valuation is also, by design, not trying particularly hard to reach the top of the range.
The angel question is more complicated. Unlike employees, angels are writing checks, not receiving options. There is no independent appraiser standing between an angel investor and whatever number a founder chooses to share.
The dual-pricing structure is just one of way VCs and founders game the perception of success in a hyper-competitive market. Another, more pervasive tactic involves manipulating or outright overstating annual recurring revenue (ARR).
The VC Niko Bonatsos, a longtime veteran of General Catalyst who more recently founded Verdict Capital, addressed this issue during one of TechCrunch’s events in Athens last month. “We [at Verdict] mostly invest before metrics, before product, before the company [has fully taken shape] but I do have a past portfolio, and sometimes the conversations are telling. I’ll get a call or an email with a very high ARR number. I’ll think: I didn’t remember that company doing so well. So I reach out to the founder: ‘What happened? Why are the numbers so strong?’ And the answer is: ‘Oh yeah, it’s 365 times the revenue we made yesterday because one of our campaigns hit.’ So yeah, some of these terms have lost meaning.”
Foody declined to comment further. Sequoia didn’t immediately respond to a request for comment.
— With additional reporting from Connie Loizos
When you purchase through links in our articles, we may earn a small commission. This doesn’t affect our editorial independence.#Mercors #Brendan #Foody #calls #Sequoia #dualpricing #valuation #tricks #TechCrunchMercor,Sequoia Partners,Valuations")
Post Comment