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Do they force you to sell every asset? What about IP? What about virtual assets? source code? Will they make you take pennies on the dollar?
I have heard horrible stories about this, so I am curious about your stories.
If you reach a point where you can sell your IP at a number where you actually net some cash, I'd call that a "success".
In the one VC-funded failure I was closely associated with (as a true cofounder), nobody gave a shit about the physical assets.
Incidentally, which is one reason cash flow positive startups should really think before accepting VC money. VC's are happy with a 10% success rate. You on the other hand, need a 100% success rate. Interests are not wholly aligned.
You're probably not going to care about the (likely negligible) value of your "IP" and source code if you've failed after taking an A-round, since liquidation preferences will dwarf them. If you reach a point where you can sell your IP at a number where you actually net some cash, I'd call that a "success". In the one VC-funded failure I was closely associated with (as a true cofounder), nobody gave a shit about the…
Their business model assumes most of their investment doesn't take off, with a few rock stars that make up for the losses. Incidentally, which is one reason cash flow positive startups should really think before accepting VC money. VC's are happy with a 10% success rate. You on the other hand, need a 100% success rate. Interests are not wholly aligned.
You're probably not going to care about the (likely negligible) value of your "IP" and source code if you've failed after taking an A-round, since liquidation preferences will dwarf them. If you reach a point where you can sell your IP at a number where you actually net some cash, I'd call that a "success". In the one VC-funded failure I was closely associated with (as a true cofounder), nobody gave a shit about the…
What if its a company with over 4 years, some sucesses but now into bankrupcy?
Earlier quoted context omitted.
What if its a company with over 4 years, some sucesses but now into bankrupcy?
Once the company is considered a loss they want to get as much of their money back as quickly as possible. What else would you expect from them?
Is it normal they will literally force you to sell it for pennies on the dollar? I understand that it was their money, how would you handle it? Just sell it and move over to the next thing?
Their business model assumes most of their investment doesn't take off, with a few rock stars that make up for the losses. Incidentally, which is one reason cash flow positive startups should really think before accepting VC money. VC's are happy with a 10% success rate. You on the other hand, need a 100% success rate. Interests are not wholly aligned.
So you're saying that the founders should be wary that VC's aren't as risk-averse in this sense?
You're probably not going to care about the (likely negligible) value of your "IP" and source code if you've failed after taking an A-round, since liquidation preferences will dwarf them. If you reach a point where you can sell your IP at a number where you actually net some cash, I'd call that a "success". In the one VC-funded failure I was closely associated with (as a true cofounder), nobody gave a shit about the…
Earlier quoted context omitted.
Once the company is considered a loss they want to get as much of their money back as quickly as possible. What else would you expect from them?
What if a product that costed us to develop was over $100,000, and I am getting an offer to buy it for $1,000? And we have many products like this example (close to 20) Is it normal they will literally force you to sell it for pennies on the dollar? I understand that it was their money, how would you handle it? Just sell it and move over to the next thing?
If you can't afford to buy the assets yourself maybe you can find a new investor to buy the assets on your behalf.
Otherwise: yes, you should just move on.