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Well, hopefully the VC's don't have majority control of the xobini board after one round of funding. If your VC's don't want you to sell early, they don't have
by mlinsey 19y ago
Well, hopefully the VC's don't have majority control of the xobini board after one round of funding. If your VC's don't want you to sell early, they don't have the power to stop you unless they have this power written into the terms of your funding agreement. I've heard of VC's trying to get a liquidation preference with a 2X or 3X cap, which would effectively deter founders from taking quick exits, but I haven't heard of them getting flat-out veto power. So I imagine that the Xobini founders certainly did have this option. Why else would they have wasted time negotiating and signing a letter of intent to sell?
- blader 19y agoYou can have control of the board, but veto rights on acquisitions is a very standard provision in the Investors Rights Agreement for institutional rounds. I'd be shocked to hear of a series A financing without that provision - that would be truly unusual.
- mattmaroon 19y agoYou're wrong. They don't need majority control of the board to veto a merger or acquisition. Most funding rounds give the investors preferred shares. An acquisition would have to be approved by the majority of preferred stock and the overall majority. I'm of course not privy to Xobni's investment terms, but I'm sure it includes that. They get that sort of veto power in >99% of funding rounds.