Ask the VC: I cut the wrong deal with an advisor -- should I kill the deal or him?
| April 30, 2008 |
The following is from Ask The VC, where Brad Feld and Jason Mendelson of Foundry Group answer questions related to venture capital investment and startups:
Q: I am the co-founder of a startup that is currently in the process of trying to raise an early stage venture round. We recently brought on an advisor who has been incredibly successful in our space and has made introductions to dozens of potential partners and VC firms where he is an investor. He has all the right relationships, but we gave him low double-digit equity to get him on board (his demand). The equity vests over a period of time and I stay up at night thinking about (1) if we should kill the deal and (2) what a VC will think of the founders when he/she finds our how much we gave up to get this individual to help. To further complicate the situation, the advisor (who is very wealthy) has taken a pass on investing his own capital and this has been a sore spot for any VC looking at our deal. How do you think we should resolve this situation.
A: (Brad): My immediate reaction is "ugh." You've been taken to the cleaners by your "advisor" - low double digit for introductions - even if they are the right ones - is radically overreaching.
Full Discussion: http://www.techconfidential.com/vc-r ... ong-dea.php
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