2 ms·
> getting the company off the ground Angels routinely invest in the early-stage with the understanding that their stake will be diluted by future rounds to whi
by jsavimbi 15y ago
> getting the company off the ground
Angels routinely invest in the early-stage with the understanding that their stake will be diluted by future rounds to which they may not be invited to, or can decline to invest further in.
If you're cahooted with an early-stage angelish investor who somehow thinks their initial financial contribution to the project ultimately lead to its success and should therefore retain their undiluted equity and equally participate in the liquidation of the company, then you have other problems you need to deal with.
How do you identify these people? Usually financially unsophisticated and like to go around telling people that they are, in fact, either an owner or founder of "their startup". Some VC's have a habit of doing that as well. It's gauche.
- nimblegorilla 15y agoMaybe we are disagreeing about different things. If someone invested money for 20% of a company they would still have some percentage of ownership after dilution. If someone invested time and skill then they should also retain some diluted equity in my opinion. The OP's 12.8m seems excessive though.
- jsavimbi 15y ago> If someone invested time and skill then they should also retain some diluted equity in my opinion. Not without a vesting schedule and certainly not at an undiluted figure representing 20% of a company six years later. If anything, absent contracts and documentation, OP would be lucky if he could secure an early termination fee based on the one-year, pre-money valuation of the company during which he worked. My senses tell me that said amount, if awarded, would not cover the legal fees involved. This would be akin to Pete Best asking for a full share of the Beatles' catalog.