5 ms·
I feel like you should name and shame, to some degree. Ask the VC for a reference to another portfolio company who had this arrangement. Or, cold email their ot
by philip1209 8y ago
I feel like you should name and shame, to some degree. Ask the VC for a reference to another portfolio company who had this arrangement. Or, cold email their other founders and ask if they
have this arrangement. Email any other investors you have to ask whether this is ok. My guess is that the investor knows they are being greedy, and they know that their reputation would get hurt if others knew they were doing this. If it's not a shady action, then I think nobody will fault you for asking around.
I don't necessarily think the VC has bad intentions. But, it sounds like they are trying to change the terms of an existing agreement. That, to me, seems unethical. Talking about these shady actions publicly tends to cause the community to self-police a lot. Perhaps another investor will inform this VC that they make money now, but hurt deal flow later, by taking actions like this.
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One other thought: you could say something like "the company lawyer says this is not a normal arrangement and wants specific paperwork due to SEC deal maker rules. Can you have your lawyer send us the proposed agreement?" My guess is that they will drop it then they realize it will cost $10k in legal fees to do this, and it might even be illegal to do contingency fees without being a registered deal maker with the SEC.
- quickben 8y agoNo. He should not name and shame, he should go talk to a laywer. Whats with the trend lately to constantly trying to solve injustice with more injustice? That's just making more problems instead of less.
- optimusclimb 8y ago> Why is the latest generation constantly trying to solve injustice with more injustice? Why is this a generational thing?
- tlb 8y agoBecause the previous generation could only publicly shame through the press, and the press was reluctant to print potentially libelous attacks.
- moorhosj 8y agoOnly the younger generations have access to new technology?
- tlb 8y agoNo, but people's ways of thinking are influenced by how the world worked throughout their lives, with a lasting influence from when they were young. Public shaming as an immediate reaction is fairly recent in the short history of the internet. The technology supported it easily in the 90s (or even late 80s using newsgroups), but it didn't become a common practice right away. Retweeting and hashtags seem to have turbocharged public shaming. The social norms of my generation (49 yo, in California) required that one try to settle business disputes directly between the parties before resorting to public shaming. I still abide by that norm, even though I recognize that many people think differently. Which way is ultimately better for society isn't clear yet.
- PeterisP 8y agoI'm not seeing anything potentially libelous in this proposal (assuming that the OP claims are not purely made up), as truth can't be libel.
- jasonbarrah 8y agoI think he was commenting on the generational trend. There is naturally going to be a shift when two billion new users enter a media landscape that was previously only occupied by a few professional firms. In addition, I think it would be hard for an intellectually honest person to deny that in the current age of click bait news that agencies of all stripes are running articles with less corroborating evidence than they would have in the past so as to be the first ones to the scoop. Unfortunately, Russian facebook trolls have set the new burden of proof for online kangaroo courts, and it is not much.
- philip1209 8y agoMaybe "name and shame" is a lousy way to describe it. But, I think it makes sense to talk about the offer more openly with people in the same startup community. As a successful startup, there will be future rounds of funding. Any follow-on investor will eventually find out about problems on a cap table. They will probably fight to reverse it before an investment, or worse - it will sink the deal and the company. If OP's VC is a novice, maybe they don't know about liquidation preference. If they are not new, then perhaps the community should know about such divergent investment terms. I agree about talking to a lawyer. But, in my experience, lawyers can find a way to make things work - and they won't stop a deal because of non-standard round terms. The non-standard terms hurt the company as they try to bring on additional investors. Any experienced founder or investor can provide guidance about how trying to "reinvent the wheel" for fundraising will cause problems down the line. To OP, I suggest reading section 3 in this article by Roy Bahat: https://also.roybahat.com/dear-first-time-angel-investor-c6af249a694b https://also.roybahat.com/dear-first-time-angel-investor-c6a...
- tptacek 8y agoI'm having a little trouble seeing the "injustice". It's probably not wise to "name and shame" over a bad term sheet (your standard recourse with that is just to walk away), but it's hard to see a moral controversy here.
- cududa 8y agoSilicon Valley has been based on reputation for decades. Weeding out the bad actors is and always has been imperative to the health of the ecosystem.
- mmclar 8y agoWhy call it "name and shame" and not just "name"? Be honest about the behavior and let people judge for themselves whether the behavior is shameful. If an action is above-board, the actor should not mind being named.
- philip1209 8y agoSee my other comment: https://news.ycombinator.com/item?id=18392574 https://news.ycombinator.com/item?id=18392574 It was a poor word choice.