3 ms·

All shares should receive equal treatment -- if the majority-owned shares get a distribution, stock or cash, minority-owned should get the same deal. If minori

• tptacek 15y ago
  The fact that all shares in a startup are not equal is VC 101. VC doesn't get common shares. They get preferred shares. It's right there in the name. Jacking non-employee holders of common stock in a private company is easily accomplished, through: * Deal structure (non-employees don't participate in earnouts) * Participating preferred liquidation preferences * Antidilution * Retention grants Your stock purchase agreement is a document carefully crafted to denude you of troublesome rights that will compromise the best interests of the company. That's not conspiracy-theoretic; it's just good business. The structure of any deal that brings liquidity to shares is a negotiation that occurs entirely between the board and the acquiring company. Any vote on the terms of that deal is a formality, since every VC-funded company of them --- every one of them --- is itself structured to ensure the board has control over the company. There is no entity with less power and fewer rights in a startup than a former employee holding shares.
  • chernevik 15y ago
    Further clarifying, thank you.