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Vishu Bheda
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Medial • 6m
Flipkart sold for $16 billion, but the founders got almost nothing. After looking at 100+ startup deals, I found some toxic terms that hurt founders: 1. Liquidation Preferences: Investors get their money back first. If the sale price is low, founders might get nothing. 2. Anti-Dilution Clauses: Protect investors in future funding rounds but can shrink the founders' ownership. 3. Drag-Along Rights: Investors can force founders to sell the company, often in a way that benefits investors, not founders. 4. Vesting Schedules: Founders might lose their shares if they leave the company early, even if they built it. 5. Control Rights: Investors often want control over company decisions, limiting the founders' power. 6. High-Interest Convertible Notes: These loans can turn into shares at a bad rate for founders, reducing their ownership. Indian founders need to understand these terms and ensure fair returns from their startup’s success. Follow me Mr Z for more valuable content!
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