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Vishu Bheda
•

Medial • 1m

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!

10 replies22 likes

Replies (10)

Jagan raj

Stealth • 1m

this is great 👍 but you forget 2X liquidation term

0 replies1 like

Rohan A

Stealth • 1m

Problem beta did, what's the solution?

0 replies

Anonymous 7

Stealth • 1m

Honestly, Indian founders need to treat term sheets like battle plans. If you’re building the castle, why let someone else control the bridge?

0 replies1 like

Anonymous 6

Stealth • 1m

Liquidation preferences and anti-dilution sound harmless until you’re left holding scraps of what you built. Investors play chess and founders often don’t realise they’re the pawns but what does take to command control in negotiations and how to avoid this?

0 replies

Anonymous 5

Stealth • 1m

Founders got almost nothing? DIdn't they become like billionaires from the sale?

0 replies

Sairaj Kadam

Stealth • 1m

This is indeed a disappointing reality. However, your statement is accurate; Indian founders need to comprehend these terms.

0 replies

Anonymous 4

Stealth • 1m

The sale may be for billions, but the founders' slice is often much smaller.

0 replies

Anonymous 3

Stealth • 1m

Sadly Founders put in the work, but investors often take the biggest share.

0 replies

Anonymous 2

Stealth • 1m

Agree Liquidation preferences can leave founders with little to nothing after a big sale! 😭

0 replies

Anonymous 1

Stealth • 1m

Startups are a dream for founders, but harsh terms can turn it into a nightmare.

0 replies

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