2 ms·
Maybe because the founders are not required to take the follow-up 1MM if they don't need it, and thus don't need to hand over equity worth that 1MM.
by X-Istence 12y ago
Maybe because the founders are not required to take the follow-up 1MM if they don't need it, and thus don't need to hand over equity worth that 1MM.
- danieltillett 12y agoThey could always agree to return the cash if they didn't need it. I guess it would depend on the agreement signed.
- rlucas 12y agoThat would be an exceedingly weird financial term. In effect, it would commit the investors to fronting cash, but give the managers an option as to whether and when to accept the cash at the agreed price (and deliver shares) or to reject some or all of it (and return cash). Just from practice, you'll never see this from normal (professional or practiced) startup investors. Nor will you see its identical twin, the required second tranche.