Raising Money? Things To Avoid

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January 15, 2012 by Angela Shupe | 1 Comment

Sometimes it is necessary to bring in a venture capitalist to help a new company get off the ground. However, there are still some situations you should avoid.

Board composition

Be careful how much power you give up early on at the board level because before you know it, you will have less than 50% of the voting shares.

Chairmanship

The board is ultimately responsible to appoint the CEO and the Chairman runs the board, so if you can hold on to the Chairmanship, you should.

Liquidation preference

In a fair situation: investors get their money back before anyone else does, even though the risk and return tradeoff would require that everyone wins or loses together.