Investors · Venture capital

Nightmare stories with early stage VCs?

Anonymous

September 16th, 2016

It is very well known the fact that divorcing an investor is harder than divorcing your own husband and wife. I think it would be useful for all of us here to know what are the VCs that we should absolutely avoid at all cost. If you could list the names and also include a few nightmare stories that would be great.
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Jason Gibb Real Estate, Director & Business Development, MBA, CMA

September 16th, 2016

I would keep in mind that there are two sides to every story. My favorite saying is that "behind every problem in a person's life is a lie." The worst lies are the ones we tell ourselves, "like we will work that detail out later." The point of contracts in business is so people don't need to rely on trusting each other. In start up business things change fast and what starts as a great relationship with lots of ambition can turn when money is at stake. That being said VC's have more experience than the average entrepreneur so they are more likely to make contracts that protect their interests and mitigate their downside risk in the event that the entrepreneur fails to hit milestones. Also note that there is a big difference between ownership and control. You don't need to have majority stake in a company to control a company. Control is more valuable than ownership in any organization until there is a liquidity event or distributions. Many VC's take minority stakes but are actually in a position of control.

Irwin Stein Very experienced (40 years) corporate,securities and real estate attorney.

September 16th, 2016

In the real world, you should kiss your butt if a VC will put money in your pocket and back your company.  You can "divorce" any VC if you return the money that they gave you. More times than not it is the entrepreneur who makes promises that they cannot keep or exaggerate what they actually can do.   

Rod Abbamonte Co Founder at STARTREK / @startupHunter / @startupWay / @CoFounderFound / @GOcapital / @startupClub / @lastminute

September 17th, 2016

Establish clear alliance and way to exit