3 ms·
Two suggestions on why this happened (from [1]) Georgia Tech auditors accused Dr. Laskar of stealing as much as $1.5 million to benefit Sayana. In the e
by x0x0 10y ago
Two suggestions on why this happened (from [1])
Georgia Tech auditors accused Dr. Laskar of stealing as much as $1.5 million
to benefit Sayana. In the end, the faculty committee determined that Georgia
Tech had paid for $50,000 worth of chips in 2007 that were sent to a Korean
chip research institute to satisfy a contractual obligation that Sayana had
with it.
Dr. Laskar argues that any chips paid for by Georgia Tech and sent to the
Korean institute originally served academic purposes. He added that the
Koreans did not keep the chips, returning them to Georgia Tech after its
engineers verified that they worked. Dr. Laskar said that this was a common
practice with other companies at the chip design center and that Sayana had
the rights to do it because of its licensing deal with Georgia Tech.
The accusations followed an episode at Georgia Tech two years earlier. The
university had been caught up in a scandal that received wide publicity in
Georgia, in which employees were charged with making personal purchases on
Georgia Tech credit cards, known as procurement cards.
And note that other professors agree "Laskar 'pushed the edges' of what seemed ethical".
Second,
With Sayana, Dr. Laskar said he didn’t take the informal path that faculty
start-ups at Georgia Tech are encouraged to follow. While he accepted money
from a start-up incubator financed by Georgia Tech, he declined later rounds
of funding because it would have involved giving up equity in Sayana,
allowing the university to install board members and professional managers
of their choosing. “I’m sure that torqued people,” Dr. Laskar said.
The article [1] quotes some university employee saying that this hasn't affected university spin-outs which seems laughable. If Georgia Tech was willing to pursue a rainmaker like this, well, Stanford et al will be happy to have them.
[1] http://www.nytimes.com/2013/11/17/technology/reaching-for-silicon-valley.html http://www.nytimes.com/2013/11/17/technology/reaching-for-si...
- jacquesm 10y agoIt's funny how the first round of funding apparently more or less requires you to accept the second otherwise you're 'unethical'. That's just plainly wrong. Either you get to decide round-by-round what the best option for you and your company is or it should simply be one round. To give a bit of seed capital, wait to see what flies (and thus is very much de-risked) and then to force an additional round requiring dilution and board members that may simply be luggage to haul around should be up to the present day shareholders. The University is playing a dirty game here. A friend of mine was in a similar situation, first round of funding was peanuts, second round - after substantial input in time, funds and efforts of the founders - on much less good terms (and effectively still peanuts) including board members and so on.
- huac 10y agoThese are known as 'pro-rata' rights, which entitle earlier stage investors to participate in later rounds in order to maintain their stake in the company. These are relatively well-established rights that you will likely find in most VC term sheets. Pro-rata rights are, to some extent, a reward for the risk that the investors take in investing in a very early stage startup. They also ensure that early-stage investors remain invested in your company; without a pro-rata right, the absolute gain of your company exiting at $100M vs $500M is much lower for the investor with a small stake. In a similar vein, the protections protect the investor from being diluted out of any significant stake in your company.
- jacquesm 10y agoSure, I'm familiar with that. But there is no such thing as a demand that a later round actually takes place. That's up to the shareholders and if they don't want to raise another round because they don't like the terms then they don't. It's not an obligation.
- huac 10y agoOk, yeah, demanding subsequent rounds against founders' wishes is pretty mean. I guess you usually need investor approval to raise further rounds, but this would be taking that right of refusal much farther.
- x0x0 10y agoWell, right or wrong, it's probably ill-advised to play fast and loose with what's university money vs your private money while turning down a follow-on investment from the university.
- jacquesm 10y agoWhy? If they don't want to run the risk of you not accepting round #2 they shouldn't give you round #1 in the first place. Either that or write better terms.
- deleted 10y ago[deleted]
- DanBC 10y agoPlease stop quoting blocks of text with 3 spaces. It's broken for mobile users, or desktop users with narrow windows, and forces people to horizontal scroll.
- x0x0 10y agoApologies; I thought 80 columns was ok for everything?