Comment by throwpoaster
Comment by throwpoaster 4 days ago
"Yes, I'll put another hundred grand into the company, but I want a pref issue with an attached board seat."
Comment by throwpoaster 4 days ago
"Yes, I'll put another hundred grand into the company, but I want a pref issue with an attached board seat."
As a hypothetical, kind of? But not really. The board is written into the company's bylaws, as a rule, and requires a board vote to change. 'Selling your board seat' really means engineering a complex deal that requires a bunch of other people to sign off.
The same is true of selling your equity, by the way. As a founder you have common shares, but early-stage investors want preferred shares with QSBS treatment. Even if you're allowed to sell your shares, which most startups don't let you do, it's not in your power to convert them to preferred or give the buyer QSBS treatment.
> 'Selling your board seat' really means engineering a complex deal that requires a bunch of other people to sign off.
The company is at (pre-)seed, so the next round is this exactly: they're probably rewriting the shareholder agreement, for example.
I wouldn't call it more "complex" any other round.
The problem we have in all these threads is that sometimes people just say stuff, because it sounds interesting or it's fun to fantasize about, and it's hard to tell that stuff apart from actual advice.
This person probably doesn't even have a board seat, but either way: you're not selling a board seat.
This person isn't an investor, but even an investor can't sell their board seat. This is getting silly. "Hold on to your founder board seat and sell it later" is not real advice.