4 ms·

The post says they raised "$250,000 from friends & family". That seems like a strong incentive to make sure your investors (read: loved ones) can recover their

• chrissnell 11y ago
  Would the typical VC deal allow founders to return money to their seed round investors before the VCs?
  • balls187 11y ago
    Pretty sure not. Seed round funding usually uses a convertible note. Assuming the VC round is a priced round, the seed round investors are treated as if they had put in money during the price round. Thus they would have same class of stock as the VC investors, with the same liquidation preferences.
  • birken 11y ago
    FWIW any professional investors, especially VCs, would love to buy out previous investors: fewer signatures, less dilution, fewer lines on the cap table, etc. But as a seed or early investor, you probably don't want to be bought out if further rounds of investment are happening (and in any standard deal you'll have the right to hold your stock as long as you want). Further rounds of investment normally means the company is successful and growing. It also means that professional investors think the investment is a good deal, so as an early stage investor your best bet is generally to stay on the bandwagon. In the case of Wattage, the company is going bankrupt, so as an investor you are going to be getting between 0 - 100% of your money back. So it seems like the founders tried to get that closer to 100% so there wouldn't be any negative feelings. But if you are an investor in a successful and growing company, getting your money back is not a good return.