Mercor’s Brendan Foody Calls Out Sequoia on Dual-Pricing Valuation Tactics
Mercor co-founder Brendan Foody publicly accused Sequoia and other top VC firms of selling the same equity at two different prices. Here's what that means.
LUMIEN4 min read
Mercor co-founder Brendan Foody went public with an accusation against Sequoia Capital, claiming the firm sells the same equity at two different prices, a practice he calls dual-pricing. According to TechCrunch, Sequoia is not the only top-tier firm doing this. Foody's call-out puts a spotlight on a valuation tactic that has largely stayed out of public view, and raises real questions for founders about what their cap table terms actually mean.
What happened
Brendan Foody, co-founder of Mercor, publicly accused Sequoia Capital of using what he calls dual-pricing: selling the same equity at two different price points to different investors. According to TechCrunch’s reporting, Sequoia is named as one example among several top venture firms that reportedly use this approach.
The accusation is notable because it comes from an active founder inside the startup ecosystem, not an outside critic. Foody chose to name a specific, high-profile firm rather than speak in generalities.
Why it matters
Dual-pricing in venture deals is not a new concept, but it rarely gets called out this directly. The core issue is straightforward: if the same block of equity is sold at two different prices, some investors are getting a better deal than others. For founders, that gap can have downstream effects on how the cap table is structured and what future fundraising rounds look like.
Here is why this is worth paying attention to:
- Valuation optics: A higher headline valuation may be supported by a smaller tranche of shares sold at a premium price, while other shares go out at a lower effective price. That can make a company look more valuable than a clean, single-price round would suggest.
- Investor inequality: Different entry prices for the same equity class means some backers have a lower bar to clear before they see returns. That can create friction later.
- Founder awareness: Many founders sign term sheets without fully interrogating whether all investors in a round are paying the same price per share. Foody’s call-out is essentially a prompt to ask that question directly.
The fact that top-tier firms are named matters too. Sequoia carries enormous credibility in the market. If founders accept terms from a brand-name firm without scrutiny, they may not spot a pricing structure that works against their long-term interests.
Our take
Foody deserves credit for saying something specific and naming names. The venture industry runs on information asymmetry. Founders, especially first-timers, are often at a disadvantage when reading complex term sheets against partners who have done hundreds of deals.
That said, one founder’s public post is not a full investigation. We do not know the specific deal structures involved, whether dual-pricing was disclosed to all parties, or whether it violates any agreements. There is a difference between a practice that is aggressive and one that is actually improper. The sourcing here, at least in the excerpt available, is thin on those details.
What we do know is that valuation mechanics in venture deals deserve more scrutiny than they typically get. If this conversation pushes more founders to ask harder questions before signing, that is a useful outcome regardless of how the specifics shake out.
For operators who are not raising venture rounds, this is still worth following. How valuations are constructed affects acquisition prices, secondary market activity, and the general health signals that the startup ecosystem puts out. Inflated or manipulated valuations eventually affect the whole market.
What to do about it
If you are a founder in a fundraising process, here are concrete steps to take:
- Ask directly: Request confirmation in writing that all investors in the current round are paying the same price per share. If the answer is complicated, dig in.
- Hire a startup-experienced lawyer: Generic corporate counsel may not flag dual-pricing structures. Find someone who reads VC term sheets regularly.
- Compare notes: Other founders in your cohort or network may have seen similar structures. The more open founders are with each other, the harder these tactics are to sustain quietly.
- Follow the story: TechCrunch’s reporting on this is ongoing. More detail may emerge that clarifies which firms are involved and how the pricing structures actually work.
The simplest rule: if your term sheet has pricing terms you cannot explain to a smart friend in two sentences, keep asking questions until you can.
