4 ms·

This. Ex-employees appearing out of the woodwork just before a funding round and wanting to divest all of their shares is definitely a scenario which (best case

This. Ex-employees appearing out of the woodwork just before a funding round and wanting to divest all of their shares is definitely a scenario which (best case) gives the investors an extra weapon with which to put pressure on the valuation/terms of the deal and (worst case) could even get the deal called off completely. Even if you're not on great terms with your ex-cofounders, think of your ex-employees (and your own share value) EDIT: I was thinking from the perspective of the company and not the individual. Getting sued is indeed the worst case (if we're being pedantic then also assuming you lose the suit of course).

jacquesm 9y ago
That's not the worst case. The worst case is where the other shareholders sue you for damaging the company.
- SaltySolomon 9y ago
  Maybe I am not just into that area, but how can you win such a suit, by that logic you could sue anybody who short sells a company...
  - krallja 9y ago
    jacquesm is talking about corporate officers harming the company, not random investors
    - jacquesm 9y ago
      Exactly.
  - jacquesm 9y ago
    There is a huge difference between short-selling stock in a public company or offering privately held stock when you are not an officer. selling stock of a company that you are C-level exec of (or founder) and that you hit with 'bad news' during a fundraising round is not going to make you any friends. Your co-shareholders could easily make a claim, whether it will stick or not is as always up to a judge but it's very dangerous territory, and you are likely operating outside your shareholder agreement (at least, all the ones that I've seen) and also likely outside of your mandate as an officer of the company (depends on your role, but usually you would be). These things have to be handled with some diplomacy and tact otherwise you could very well harm the company directly in such a way that the harm would be easy to quantify. Which is a very bad situation to be in, so make sure you play by the book when doing these things.
  - louisswiss 9y ago
    Not sure about the US and not a lawyer, but often as a founder/board member you sign a shareholder agreement which includes a provision not to undertake anything which would deliberately cause damage to the company/other shareholders. There are perhaps other points as well. I imagine the US is more litigious here than Europe (where my experience comes from)

jacquesm 9y ago

That's not the worst case. The worst case is where the other shareholders sue you for damaging the company.

SaltySolomon 9y ago
Maybe I am not just into that area, but how can you win such a suit, by that logic you could sue anybody who short sells a company...
- krallja 9y ago
  jacquesm is talking about corporate officers harming the company, not random investors
  - jacquesm 9y ago
    Exactly.
- jacquesm 9y ago
  There is a huge difference between short-selling stock in a public company or offering privately held stock when you are not an officer. selling stock of a company that you are C-level exec of (or founder) and that you hit with 'bad news' during a fundraising round is not going to make you any friends. Your co-shareholders could easily make a claim, whether it will stick or not is as always up to a judge but it's very dangerous territory, and you are likely operating outside your shareholder agreement (at least, all the ones that I've seen) and also likely outside of your mandate as an officer of the company (depends on your role, but usually you would be). These things have to be handled with some diplomacy and tact otherwise you could very well harm the company directly in such a way that the harm would be easy to quantify. Which is a very bad situation to be in, so make sure you play by the book when doing these things.
- louisswiss 9y ago
  Not sure about the US and not a lawyer, but often as a founder/board member you sign a shareholder agreement which includes a provision not to undertake anything which would deliberately cause damage to the company/other shareholders. There are perhaps other points as well. I imagine the US is more litigious here than Europe (where my experience comes from)