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Say someone wants to buy Loopt for $20MM...
Can Sam go back to the investors and say, "Here's your money back plus x, I'm doing it" since he has the majority ownership? Can you structure a deal such as long as they get the investment back, you can sell at whatever price you want?
- scrob2 19y agodude loopt so scammy they dont have users lol
- scrob2qqq 19y agoguys looopt sucks.. it is run by gay sam and has no users
- s_baar 19y agoUsually institutionalized investors have agreements in the term sheet specifying under what conditions the founder can sell. Someone else will have to tell you what those terms are exactly, though.
- pg 19y agoThat's not even the right number of digits, incidentally.
- aswanson 19y agoI figured as much but put out a lowball figure purposely to ask the question, "Can a founder get out by paying back investors (invested sum), taking the money and running?"
- pg 19y agoAs s_baar says http://news.ycombinator.com/item?id=38560 http://news.ycombinator.com/item?id=38560 the short answer is no, because funding deals almost invariably include a veto over acquisitions, regardless of who has what percent of the stock. There may also be a liquidation preference that says the investors get n times their money back first in any sale. The slightly longer answer is that it's not that simple, because if you really want to sell and you're essential to the company, you can in effect threaten to go on strike if they exercise their veto, and then you'll all end up with less. As long as founders are essential to the company, they have a lot of power. So in practice they may be able to talk investors out of exercising their veto (though not their liquidation preference).