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Way more common than you think. Founders do not talk or advertise this part of startups, and often hide it from the employees themselves. Often the only way y
by mahyarm 10y ago
Way more common than you think. Founders do not talk or advertise this part of startups, and often hide it from the employees themselves.
Often the only way you find out is if you have access to and read through the company documents. Another way is having a friend that works in finance and has visibility into this kind of stuff / you monitor SEC filings or other finance services or heard it through the rumor mill.
The logic is to incentivize the founders to go for the big wins that the VC formula is set up for.
- rubicon33 10y agoI've never been a founder of a startup, so my perspective as an employee is clearly somewhat biased. That said, I can't help but feel, that taking hundreds of thousands, if not millions of dollars, from a failing startup, should be considered fraud...
- mahyarm 10y agoThey don't do it when it's failing, because no investors would do it. It usually happens when the startup is on an upward trend. It's usually done as part of an investment round of some sort. It's not fraud, it just isn't obviously public.