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What happens if there is no next funding round (startup fails)? Do the startup founders have to return the debt?
by pkrumins 16y ago
What happens if there is no next funding round (startup fails)? Do the startup founders have to return the debt?
- ladon86 16y agoGenerally not, and I'm quite sure they wouldn't have to for this deal. Obviously any exit event would be a valuation and Yuri would get a cut. But in case of failure, everyone walks away empty-handed.
- sdrinf 16y ago"Startup fails" is the reason why these companies have the so-called "limited liability". They file for bankruptcy, founders get on with their lifes, investors see nothing. This is, in fact the vast majority of the cases, and the reason investing is called "high-risk, high reward".
- jaredstenquist 16y agoAll is a loss. Entrepreneurs are not help personally liable for the debt in this case.