4 ms·
IME, it's about pushing you to overextend on the forecast, so that when you don't meet it, they get more control or claw back funds promised or given. Fudging
by e40 2mo ago
IME, it's about pushing you to overextend on the forecast, so that when you don't meet it, they get more control or claw back funds promised or given.
Fudging actual numbers is a dangerous and illegal game to play and never pays off, except in the edge cases (e.g., Enron... but usually you have to pay the Piper).
- lumost 2mo agoInteresting, this presents an meta for an early stage investor. Fund a company with a BS forecast based on your ability to make money on the claw back provisions.
- ElProlactin 2mo agoYou're never going to make money from that. By the time you're presented with the opportunity to use them, you're on the losing end.
- e40 2mo agoI see it as a game where investors get a better deal than the founders wanted. There is a lot of innuendo on the "we're not really interested, unless there's more upside for us" and the founders are then under pressure to up forecasts. I think the investors believe the business is sound. It's just a way to get it for a better price. Of course, if the business is a unicorn, none of this applies.
- NDlurker 2mo agoOff topic, but I like your blog.