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Why do VCs let founders cash out pre-IPO? AFAIK fiduciary self dealing is illegal in public companies but for whatever reason WeWork's investors evidently didn
by paws 7y ago
Why do VCs let founders cash out pre-IPO?
AFAIK fiduciary self dealing is illegal in public companies but for whatever reason WeWork's investors evidently didn't seem to care. Why?
- lonelappde 7y agoThe founders have control of the company and hold it for ransom. They can destroy the company if they aren't kept happy.
- ddalex 7y agoif you owe somebody 500k, they own you. if you owe them 50B (val of wework), you own them
- paws 7y agoRight, that's the part I'm a bit confused by. If I'm understanding you right, it sounds like VCs choose to not require fiduciary-style obligations of the founders? e.g. whatever the contract looks like, I'm a bit surprised it wouldn't have a term along the lines of 'by taking this money you promise not to self deal'
- navigatesol 7y ago>Why do VCs let founders cash out pre-IPO? Because they aren't as smart as we/they think they are. Like most people, they have zero repeatable ability to spot unicorns or conmen.