Posted by Anonymous on 2009-08-29
Tags: Negotiation Shareholder Control
Posted by Anonymous on 2009-02-12
Tags: Operations Vesting Founders Control
Posted by Anonymous on 2008-06-20
Tags: Negotiation Control
Posted by Muckraker on 2008-01-22
Tags: Preparation Control Humor
Do you know what the Golden Rule is"
The Golden Rule is:
THE GUY WITH THE GOLD RULES!!
Another words, the VCs usually end up with control of your company, especially if you have to raise alot of money from them. Since this is usually the case you should take particular precaution in selecting who is going to greatly impact your success. A High Standard of ETHICS and Good and Fair JUDGEMENT in difficult situations are the two most important traits to look for in picking a VC investor to join your board. The only way you can figure these things out about a person is to check several references on them. References of CEOs and founders that they have funded in the past. Not just references they give you but references that you find on your own due diligence. You can be sure that many VCs do not have a high ethical standard and could care less if you are treated fairly as a founder or member of the management team. Many do not care if you make any money on your deal and they would just as soon rob you if they could get away with it. Dont get me wrong, there are many fine VCs to work with but there are also many that are not.
It is partiularly important to get honorable investors that have these traits in your in the Series A round becuase they will often set the standard for board behavior as other VCs join your board in later rounds. Also, qaulity investors attract more quality investors to your deal as you raise more capital. Dishonest investors attract more of the same.
When your company hits troubled waters on the road to success, AND THEY ALL DO, then you will be thankful for having taken the time to get investors that will stick with you through HELL and HIGH WATER.
So you get your first term sheet and you are so excited to get some funds that you dont do your homework on who you are letting into your company...DONT DO IT!! Check references thoroughly or potententially pay a big price.PRIVATE: Members Only