3 ms·
>But leaving the founders of a company with nothing while others earning money feels completely wrong. Why? They founded a company which tanked. They made po
by EpicEng 12y ago
>But leaving the founders of a company with nothing while others earning money feels completely wrong.
Why? They founded a company which tanked. They made poor decisions along the way which led to said taking. They did it on someone else's dime. No one made money here, so why shouldn't the investors get some of the investment back?
- Kliment 12y agoIsn't the whole point of venture capital that you take on a large risk in return for a large potential payout. VC is called "risk capital" in a number of languages for a reason.
- vidarh 12y agoBut at some point the risk gets so large that the choice is for you to not get any investment at all, or get one with additional clauses to reduce the risk to levels acceptable to your potential investors. It's a tradeoff. And sometimes it can work to your benefit. E.g. if you and your potential investor disagrees about the level of risk and/or about the potential size of an exit, you can try to negotiate a multiple liquidation preference in return for less shares.