What is their real motive?

1 pointsby williegrossvor 12 Jahren2 comments

Let's say you joined a tech incubator. Let's say you decided that it was in the best interest of your company to depart towards the end.

Let's say when reaching out to deliver your incubators' stock certificates they declined to accept them and preferred to offer you a promissory note on really generous terms...

Would you smell a rat? Why would they not want the stock certificates?

One may say; "they don't want them because they will be worthless as you're likely to fail - especially without their support."

Ok, but if the stock certs are worthless, why invest in high power lawyers to draw up a promissory note where the "startup doomed for failure" will have no chance of paying the money back anyway?

All I can come up with is this; a) bound by the terms of the initial offer letter, their providing you with the outstanding balance of services they failed to deliver is more expensive than just drawing a note b) maintaining oversight of their investment in a startup doomed for failure is more expensive than issuing a note...

Really want to make sure I'm thinking about this from all angles.

Please - I welcome you guys' thoughts.

1 comments

deanfranksvor 12 Jahren

Stock certificates may also be subject to dilution at the whim of the majority shareholders.

sbierwagenvor 12 Jahren

That, or if the startup gets acquihired, the purchasing entity may just pay all the cofounders directly and declare the value of the stock to be zero.