Hypothetically speaking, a startup gets some rounds of investment from VCs, operates for a few years, and run out of runway. What do these final months look like? Do the investors try to get their money back?
Hypothetically speaking, a startup gets some rounds of investment from VCs, operates for a few years, and run out of runway. What do these final months look like? Do the investors try to get their money back?
From an employees perspective:
They will prohibit vacation or send everyone away.
Your salary will come late.
Various people you haven’t seen will visit the office.
There’s a running gag of packing up to move offices and being told you have all been fired the next day, Arrested Development style.
From a higher-level perspective:
Some investors will write off losses to save on their taxes.
Others will try to sell any tech or other properties the startup has managed to create to recoup losses.
Creditors and bond holders will be paid first before stock holders. Most vc funding comes in exchange for stock.