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It's not a grey area. It's simply not enforced. If you're an investor and you find out that the co-founders gave you bad numbers to juice the next round (this i
by engineeringwoke 5y ago
It's not a grey area. It's simply not enforced. If you're an investor and you find out that the co-founders gave you bad numbers to juice the next round (this is common to the extent that I have personally seen it multiple times), you have no incentive to get the law involved. You would lose your entire investment, instead of just some of it.
And oftentimes, the extra juice gives them enough runway to make things work. Cheaters win, that's the way it is.
- CRConrad 5y ago> If you're an investor and you find out that the co-founders gave you bad numbers to juice the next round [...] you have no incentive to get the law involved. You would lose your entire investment, instead of just some of it. > And oftentimes, the extra juice gives them enough runway to make things work. Above all, it gives you [1] time: To cash out that investment. Sell it to some later bigger sucker who doesn't already know or suspect what you know or suspect, maybe even at some more modest profit -- not making any loss at all! -- in stead of the super-jackpot you'd been hoping for if it were a "unicorn". Early investors who start to smell a rat don't only lack an incentive to raise the alarm, they have a positive incentive to keep the lid on the story. ___ [1]: The editorial "you", the hypothetical early(ish) investor.
- WalterBright 5y agoThe more I think about it, the more parallels with Bernie Madoff!