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One mistake in the above: the right to participate in future financing rounds has nothing to do with qualified investor status, and everything to do with whethe
by danshapiro 16y ago
One mistake in the above: the right to participate in future financing rounds has nothing to do with qualified investor status, and everything to do with whether your agreement guarantees it. Good CEOs will often make sure all their investors are given a chance to participate (because it's the right thing to do and reduces the chance of one class of lawsuits) but it's only a guarantee if your documents say it is.
- tptacek 16y agoI was locked out of an investment round at one company because of qualification status. I'm pretty sure being meeting the accredited investor standard actually does matter, at least if you're not an employee and the round involves an exchange of money for financial instruments.
- danshapiro 16y agoIf your agreement had guaranteed you investment rights you would have had them. Since it didn't, it was at their discretion, and they could have used many different criteria to make that decision. Now as a general rule, when you have an option in the matter, you don't want non-accredited investors in your deal. But assuming that accredited status grants follow-on investment rights (or that lack of them prevents it) as a rule is wrong.