It seems like if you make a contract and a stock warrant is part of your side, and the other side doesn't keep their side of the deal (for example because they went bankrupt), then that warrant should be void, because the contract was breached.
They thought they were joining an accelerator – instead they lost their startups
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Re: They thought they were joining an accelerator – instead they lost their startups
#72Earlier quoted context omitted.
Of note from the article: she complained and was refunded the money after being stood up for the meeting, but they never cancelled the contract she paid to sign that gave them the right to buy her out of her own company for pennies, so once it passed to bankruptcy the creditors still took her company.
Wouldn't a contract like this be considered unenforceable? There were no services rendered, no exchange of value
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Re: They thought they were joining an accelerator – instead they lost their startups
#73Earlier quoted context omitted.
Of note from the article: she complained and was refunded the money after being stood up for the meeting, but they never cancelled the contract she paid to sign that gave them the right to buy her out of her own company for pennies, so once it passed to bankruptcy the creditors still took her company.
Wouldn't a contract like this be considered unenforceable? There were no services rendered, no exchange of value
The issue is they dropped a bet-the-company litigation on 1,000 startups that are not positioned to do anything but close operations.
Re: They thought they were joining an accelerator – instead they lost their startups
#74Earlier quoted context omitted.
Read your comment and parent. The quote from the article doesn't explain why the warrant owner matters, and you suggest the cap table structure does, which makes sense. However, the structure has nothing to do with ownership of parts of that structure. Why would warrant ownership matter?
Because as an investor in a company, you don’t want that company’s founders constantly distracted by a piece of shit investor who has a massive stake in their company. Pretty straightforward. Investors can create tons of havoc, and “bought equity from a bargain bin outside of a bonfire” is probably as good a warning sign as any.
The size of the warrant is still the structure. In terms of investment, as the warrant is demonstratedly transferable, the investor ownership is always an unknown.
This still sounds like structure(size and control of a single warrant) rather than who. The real issue seems to be any large warrant, that is, the uncertainty in the structure.
Re: They thought they were joining an accelerator – instead they lost their startups
#75Rule #14: "Never outsource economic control structures, or one may end up indentured" Sometimes one needs to admit they were conned, and start over... When people start out, no one tells them there is an ecosystem of legal-cons that target vulnerable small firms. Even this forum has users the constantly spam people with various funding scams. My condolences, some lessons can take a year or two to recover... =3
That reminds me of a book quote, about a semaphore transmission-line company as a kind of fantasy-version analogy for modern telecoms. > "[My father] was chairman of the original Grand Trunk Company. The clacks was his vision. Hell, he designed half of the mechanisms in the towers. And he got together with a group of other engineers, all serious men with slide rules, and they borrowed money and mortgaged their houses…
I wish the mistakes I've seen over the years were fictional, as even the people I found disagreeable still deserved better treatment.
Any CEO worth anything owns their mistakes, adapts, and mitigates future issues.
Good luck out there =3
Re: They thought they were joining an accelerator – instead they lost their startups
#76What a psychopath. To anyone who may be in this kind of situation, trust your instincts and leave . It will not get better. You will find other, better opportunities elsewhere. Best lesson I ever learned was from a high level exec that had just started at the company where I worked. He quit in 2 weeks. Impressively, he did it without drama or really even causing bad will - he just told the CEO it wasn't a match, and…
I once worked at a place where an employee started their first day at the start of the shift. They mumbled their way through it to lunch where they never returned. That's the shortest I've personally seen. Absolutely not a c-suite role or anything management related though.
I had somebody sit near to me who wanted to leave at lunchtime but was convinced to stay on and left after the second day.
This was on the ads team. The job involved managing ads on our site (via google ads and some other providers). They had never done this sort of thing before[1] and were not up to being thrown in the deep end.
[1] I think they had done other sorts of advertising, just not for websites
Re: They thought they were joining an accelerator – instead they lost their startups
#77Would have been nice for the bankruptcy company (what is the term… administrator? receiver?) to try to sell the portfolio of investments as-is to another VC. This may have both kept the startups alive and got them more $ overall for creditors. Maybe this would have been more doable in 2020!
Re: They thought they were joining an accelerator – instead they lost their startups
#78I mean, maybe you shouldn't sell of the right to buy your company.
The accelerator sounds scummy, but at the same time i can't help but wonder wtf the owners of these companies were doing. Did they just not read the contract? If you own a company i think you have a lot of responsibility for the shitty business deals you make. Its not like we are talking about some senior citizen hoodwinked into signing their home away.
Re: They thought they were joining an accelerator – instead they lost their startups
#79Anybody else nodding along like... "mhm mhm Austin...makes sense..." "I wonder when the Florida scams are gonna start hitting?"
I’m curious to know what you mean by this. Does Austin have a reputation for this kind of thing?
Austin and Miami were supposed to be the new tech start-up hotspots after the great COVID WFH migration. The zeitgeist was the SF Bay area was played out for a multitude of reasons the departees were only too happy to blog about. Austin and Miami also have a bunch of investors without a background in tech - in all, lot's of new players in a high-growth area make it a target-rich environment for those lacking scruples.
Re: They thought they were joining an accelerator – instead they lost their startups
#80I mean, maybe you shouldn't sell of the right to buy your company. The accelerator sounds scummy, but at the same time i can't help but wonder wtf the owners of these companies were doing. Did they just not read the contract? If you own a company i think you have a lot of responsibility for the shitty business deals you make. Its not like we are talking about some senior citizen hoodwinked into signing their home awa…
Every contract has some crap in for what seems like unlikely scenarios. If you can’t negotiate it out it is either that or the highway. If these startups could get YC funding they probably would have. So for some it is accept a possible imperfect contract or back to employment. Employment itself being full of contracts with crap clauses as well as common law itself having crap. Show me the perfect contract!