Startups · Entrepreneurship

What to do if an investor signs offering docs but never funds the agreed investment?

Syam Vemula Senior BI Consultant at InfoMagnus

September 28th, 2016

At the moment the situation is as follows- the investor signed the offering documents via a convertible note for the amount of $250K. Now the investor has gone dark and is not responding to emails and has not wired the agreed amount. Appreciate the help.
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Vinay Menon Founder at Mera Tiffin

September 28th, 2016

@Syam Move on, there are other investors who will back you. Time is too precious to be lost in chasing a non paying investor just because he signed a Doc and agreed to pay.
Good Luck with your next investor hunt.

Bob Sharon Member and active supporter at Citizens' Climate Lobby

September 28th, 2016

Either the investor had a change of heart or other more pressing problems required the funds the investor was going to use.

Martin Omansky Independent Venture Capital & Private Equity Professional

September 28th, 2016

Maybe he is dead. It happens. More than likely, you need an aggressive lawyer to chase him down. If he has signed the offering documents, he has entered into a contract (unless there is an escape clause in there somewhere) and is obligated to abide by it. Sent from my iPhone

Laura Oliphant Business Development and Venture Capital Professional

September 28th, 2016

Did he sign docs or a term sheet?  If the latter, you are probably out of luck.  If docs, get an attorney...

Arthur Lipper Chairman of British Far East Holdings Ltd.

September 28th, 2016

Don’t waste time and resources in trying to force an investment or honoring of an agreement. The investor will ave lots of "outs" and a countersuit could prove distracting.

Max Garkavtsev CEO at QArea, TestFort

September 28th, 2016

The chance to get a GOOD atterney on contingency basis is not that high, and it will mean you will pay a lot to him of investment, not debt.. And as you are seeking money, it's hard to imagine you have extra funds, time and attantion for a legal fight payed to atterneys on hourly fees. Just forget it.

Angela Leaney Founder, The Bespoke CMO. Advisory Board Member & Advisor

September 28th, 2016

You can drive yourself crazy trying to figure out why this happened, and drive yourself to distraction trying to figure out to pursue him. Neither is productive. Even if you locate him, litigation is never a good way to start a relationship. Really scrutinize your process in case there is anything to be learned for next time. And move onto next time as quickly as possible. You attracted interest - you'll attract it again. Good luck.

Ron Warshawsky Founder and CEO of Enteros. Years of successful experience in startup business and database technology.

September 29th, 2016

Unless this is a desperate situation, save your energy and go after other investors. This is not a period in the life of your young company to consider legal action (even if you can do it for free and could win)

Ajay Agrawal

September 29th, 2016

I know it is lot of hard work down the drain you put in with this investor.

Just move on and pitch to other investors.