If you can spot from a mile away that an investor is looking to screw you, then he probably is. If not now, then possibly down the line. Life is too short, etc.

If you can spot from a mile away that an investor is looking to screw you, then he probably is. If not now, then possibly down the line. Life is too short, etc.. Every deal is different, but two things that I don't particularly like are: 1/ Multiple liquidation preferences, 1-2-3-5x (i.e. we put in $1M, but we need $2M back before you get any profit) 2/ Participating preferred vs non participating preferred (i.e. we invest $1M for 25% of the company. The exit is $10M. In the one case, the investor gets to take back the money he put in, and he then gets 25% of the gains. In the other case, he just gets 25% of $10M) The combination of both also happens in some cases