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There are lots of ways to do it. For example, the company could be set up so 10% of the company is owned by folks who have type A stock and 90% by owners of ty
by anamax 17y ago
There are lots of ways to do it.
For example, the company could be set up so 10% of the company is owned by folks who have type A stock and 90% by owners of type B. The company can issue additional type B stock without issuing more of type A stock. That dilutes the value of each type B share without affecting the value of type A shares.
- netcan 17y agoThe reason I am confused is this: they still end up with something, sometimes, at least. Otherwise noone would do it. The question is then, why doesn't this become a reduced to absurdity example where past investors are always left with nothing. If they can be wiped out, why aren't they always wiped out?
- gridspy 17y agoThe VCs who did that would get a bad name. Also, it is in everyone's best interest that the angel investor network is healthy.