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It sounds like you are asking the investor to take all the risk of a standard investment, but with potentially less upside. Seems like a tough sell.
by answerly 16y ago
It sounds like you are asking the investor to take all the risk of a standard investment, but with potentially less upside. Seems like a tough sell.
- EGreg 16y agoI'd argue that there is more upside in the long run. If you stop taking the investor's money it's either because your company has become profitable, or because you have been able to do a round of funding at a higher valuation. Either of these means that the investor has started to get a return on their money, which is way better than sinking their entire investment into a company that fails. Your investor can even do a partial exit at the next round, reimbursing themselves for 100% of their original investment, and still have shares left over. Shouldn't the investor incentivize the entrepreneur to do this?