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First, we don’t know the specifics of that original agreement. Further, they can change the pricing to dramatically reduce the value. I personally know someone
by azinman2 6y ago
First, we don’t know the specifics of that original agreement. Further, they can change the pricing to dramatically reduce the value. I personally know someone who effectively lost control of their company and with it any real equity in a company that’s now very very large, and I’ve seen it be attempted with another friend as well.
There’s no shortage of stories out there of founders being burned by VCs once the company has real money behind it.
- s1artibartfast 6y agoDilution and loss of control are entirely different than removing a single owner from the cap table. Down rounds and massive dilution absolutely happen, but this hits the entire cap table.
- azinman2 6y agoExcept they can treat current employees differently. It doesn’t have to be a down round. In the case I’m thinking of, valuation went up a lot… it was the opposite of a down round. And it was all engineered to screw all the previous people as it was taken over by an entirely new crew as a lead investor directed.
- s1artibartfast 6y agoIt is hard to speculate on what happened without more details. There are a lot of ways founders and employees can bee screwed, especially shenanigans with options, but as I said above, Im not aware of any of anyway to destroy fully granted/vested stock.