There are a lot of great lessons to be learned from this situation. First, you have to do what you think is best for your business...and that's not always easy.

There are a lot of great lessons to be learned from this situation. First, you have to do what you think is best for your business...and that's not always easy. You will damage relationships making these types of tough decisions and that's just how it goes. If you don't have the stomach for it, how are you ever going to fire someone who isn't getting it done, when they have a family to support? Many VCs will try to create a no-shop dynamic...they make you an offer and you can't use that offer to get a better one from someone else. However, you have to do what's best for your business - even if they won't like it. And BTW, if all they have to offer is cash and locking you in via guilt trip, if you have an alternative, you should ditch these folks. But, you don't always have an alternative. The last thing you should consider is that no one will ever be better to you than when you are just about to sign on the dotted line. If this is how they treat you now, how do you think it'll go in the future? What kinda crap do you think they'll try to pull when you have a real problem? Their solution of adding the other person for the round and the only person to get diluted is you, especially under the terms you listed, is a huge red flag. First off, you would take all the dilution. Secondly, the numbers don't make sense. They propose that the other VC, coming in with 2.5x the cash, and a higher valuation gets way worse terms then they get...that's a helluva counter offer. If you want to raise more money, that's fine. But, the person writing the biggest check typically sets the terms. But, you know what's a great way to figure out if someone is going to be a good partner? Go to Brad and tell him what's up. He'll probably have good advice AND if you agree with him / empower him, will probably reach out to the other party and come up with terms or just cut a bigger check and keep those folks out of the deal. Either way, it's a win for you.