Shareholder won't accept deal

[billybob99]

The VC will be investing in a new Ltd company now, they will take care of it.

 

[cjd]

Personally, I think your 'investor' is either insane or imaginary.

 

[billybob99]

Personally I think maybe you don't have a clue about startups and venture funding, but then again its all personal opinion, its not rocket science the VC has asked are we investing in the existing company where there are 3 shareholders or are we creating a new one.

I want to get rid of one shareholder who doesn't want to move, so it is best I create a new Ltd company with just the 2, this is a personal problem and nothing to do with the VC.

 

[cjd]

Personally I think maybe you don't have a clue about startups and venture funding, but then again its all personal opinion, its not rocket science the VC has asked are we investing in the existing company where there are 3 shareholders or are we creating a new one.

I want to get rid of one shareholder who doesn't want to move, so it is best I create a new Ltd company with just the 2, this is a personal problem and nothing to do with the VC.

So, the VC with £500k doesn't care whether he's investing in a business with 3 shareholders with a couple of grand in the game or some other random number; he just wants to know which to keep his records straight? Yeh, right.

Pffnrr. Assuming this whole thing isn't just a Poe, the answer is obvious, you create a new vehicle for the new investor and dissolve the old company. (But of, course, what do I know about business investment?)

Goodnight.

 

[billybob99]

So, the VC with £500k doesn't care whether he's investing in a business with 3 shareholders with a couple of grand in the game or some other random number; he just wants to know which to keep his records straight? Yeh, right.

Pffnrr. Assuming this whole thing isn't just a Poe, the answer is obvious, you create a new vehicle for the new investor and dissolve the old company. (But of, course, what do I know about business investment?)

Goodnight.

You complete joker. I think we've all already established the answer is to dissolve the company and start a new one before you advised that again 3 hours later. The issue with people was apparently it is wrong to "screw" the investor over.

And we've already established the VC knows there are currently 3 shareholders in the current company a long time ago... this is more about booting one of the shareholders, which the VC does not know about.

 

[MikeJ]

Personally, I think your 'investor' is either insane or imaginary.

Not just me then. After all, the OP was wondering if the shareholders need to add up to 100%.

 

[Chris Ashdown]

It sounds like you have told the old investor that you have someone willing to input a large sum of money and therefore want to buy him out for the original investment he made, and after that you increased the offer to £2k

This all relates to the old company of which he owns 5%

Now deliberately starting a new company to get rid of him after telling him about the new investment raises to concerns, One you have a duty to the old company to work in it's best interests under company law, and two you have now admitted why you want to set up a new company to defraud him of his rightful share.

You have stated all this on a open forum he can find at any time

The reason you are in this position is that you screwed up in telling him about it

 

[businessfunding]

OK, so pretending that you went to a well known VC who decided to invest £500K (yes, I do know a bit about it & that statement is wrong on many levels)

What percentage is the VC taking?
They wil have determined who owns the IP in their due diligence, so who is it?
What operational input will they want?
what is the desired exit strategy?

As a general point, no idea of the real situation, but the underlying problem is that =- like about 80% of businesses seeking investment - you really haven't thought through the long term implications. Whatever the truth in the new investment the same will apply

shareholders have rights, not responsibilities. Directors have responsibilities & a duty of care to shareholders.

your investor invests in a business, not an idea. If M & S decide to move into discount retailing, they can't tell their shareholders 'tough, you invested in middle market fashion, so you can't have the discount' - it is a strategic business decision.

Any savvy investor will tie you to the ground with a shareholder agreement.

 

[WHARTY]

They add no value and the VC would like to see only core people involved with the idea on board. 5% sounds like a small amount now but this idea will probably go through another 2 more rounds of funding in the future.

There is no real problem apart from the fact someone has invested £1k done nothing for over 1 year and then found out a VC has invested and wants 10 x return.

They add no value??? why did you let them invest then? They risked throwing away 1k and now they see an opportunity to cash in. That's investing for you and I don't think they are doing anything wrong.

 

[Joseph H]

Business head aside, I can't believe that's how you treat family shocking

 

[Chris Ashdown]

This must be a windup, nobody can seriously invest half a million in a company with two people who don't understand the basics of company laws and investors,

What percentage shareholding does the person want for their money and how much are you guys putting in

Is the money in one lump sum or in small parcels

What experience have you got in Marketing and selling

 

[billybob99]

It sounds like you have told the old investor that you have someone willing to input a large sum of money and therefore want to buy him out for the original investment he made, and after that you increased the offer to £2k

This all relates to the old company of which he owns 5%

Now deliberately starting a new company to get rid of him after telling him about the new investment raises to concerns, One you have a duty to the old company to work in it's best interests under company law, and two you have now admitted why you want to set up a new company to defraud him of his rightful share.

You have stated all this on a open forum he can find at any time

The reason you are in this position is that you screwed up in telling him about it

I may have said somethings in the pitch that were not exactly as they were, yes, but that is all done now. I don't really want to go round and round is what all these people on here think morally. I think I have my answer that I can indeed create a new Ltd company.

 

[billybob99]

OK, so pretending that you went to a well known VC who decided to invest £500K (yes, I do know a bit about it & that statement is wrong on many levels)

What percentage is the VC taking?
They wil have determined who owns the IP in their due diligence, so who is it?
What operational input will they want?
what is the desired exit strategy?

As a general point, no idea of the real situation, but the underlying problem is that =- like about 80% of businesses seeking investment - you really haven't thought through the long term implications. Whatever the truth in the new investment the same will apply

shareholders have rights, not responsibilities. Directors have responsibilities & a duty of care to shareholders.

your investor invests in a business, not an idea. If M & S decide to move into discount retailing, they can't tell their shareholders 'tough, you invested in middle market fashion, so you can't have the discount' - it is a strategic business decision.

Any savvy investor will tie you to the ground with a shareholder agreement.

That is your own opinion at the end of the day, I do find people who've never raised VC funding or never seen that kind of money in their life always want to doubt it, and I don't need to be interviewed.

The topic was how can I sort this and the answer is to start a new Ltd company and dissolve the old one when the time is right.

 

[ethical PR]

You complete joker. I think we've all already established the answer is to dissolve the company and start a new one before you advised that again 3 hours later. The issue with people was apparently it is wrong to "screw" the investor over.

And we've already established the VC knows there are currently 3 shareholders in the current company a long time ago... this is more about booting one of the shareholders, which the VC does not know about.

BB is there any need to be so rude to an established member who was trying to help?

It appears as an outside observer that if there was a VC wanting to invest 1/2 million there would be much more due diligence on their part, before any investment. And that as a start up seeking investment, you would have looked more carefully into the rights and responsibilities associated with running a limited company and seeking investment.

 

[billybob99]

This must be a windup, nobody can seriously invest half a million in a company with two people who don't understand the basics of company laws and investors,

What percentage shareholding does the person want for their money and how much are you guys putting in

Is the money in one lump sum or in small parcels

What experience have you got in Marketing and selling

Can't they?

 

[billybob99]

BB is there any need to be so rude to an established member who was trying to help?

It appears as an outside observer that if there was a VC wanting to invest 1/2 million there be much more due diligence on their part, before any investment. And that as a start up seeking investment, you would have looked more carefully into the rights and responsibilities associated with running a limited company and seeking investment.

I don't think it was rude, some people who are "established" on here, I've noticed think they are Richard Branson with their knowledge but the things that come out of their mouth are anything but.

Yes pretty much, I didn't say they gave me 500k and here we go, I said it was agreed on based on the meeting and next Wednesday it will get rolling, they will do their due diligence with the info we've given them so far and decide if we are going ahead.

It has nothing to do with 1 clueless guy or 2 or 3, they will take care of accounting and finance and we will focus on the business.

 

[MikeJ]

Yes pretty much, I didn't say they gave me 500k and here we go, I said it was agreed on based on the meeting and next Wednesday it will get rolling, they will do their due diligence with the info we've given them so far and decide if we are going ahead..

No you didn't. You said you'd "raised £500k investment from a well known VC in London"

 

[ethical PR]

You don't think saying to different people on a forum 'You complete joker' and 'what an idiot you are' on a business forum is rude?

I do agree that not all established posters on here talk sense all the time. However the two you insulted and yes, were rude to, do talk sense. Just because you don't like what they are saying doesn't mean that they aren't right, and know a little more about the issue you were asking advice about than you do.

Surely that's why you came on the Forum - to get informed advice?

And my twopence worth is that legally I don't know the rights and wrongs, but morally what you are suggesting is suspect, relative or not.

 

[businessfunding]

Well there you go.

I've learned more about VC from this thread than I have in the last 25 years

 

[billybob99]

No you didn't. You said you'd "raised £500k investment from a well known VC in London"

On page 1 I said; Have they already parted with the cash? No, the paperwork is due to be signed next week, I thought I said Wednesday somewhere but maybe not.

 

[UK Contractor Accountant]

I would be interested to learn what you are going to spend the £500K on should the deal go ahead?

 

[billybob99]

I would be interested to learn what you are going to spend the £500K on should the deal go ahead?

It is mainly development, it will take about 3 months to get a decent product (SaaS) developed, using at least 4 developers. Part of this funding is for registering IP and then a substantial part is marketing.

The above might not make much sense but this idea is in the medical/pharmaceutical sector.

 

[UK Contractor Accountant]

It is mainly development, it will take about 3 months to get a decent product (SaaS) developed, using at least 4 developers. Part of this funding is for registering IP and then a substantial part is marketing.

The above might not make much sense but this idea is in the medical/pharmaceutical sector.

Will need a good IP lawyer - register Europe and Worldwide.

 

[kulture]

Can we please stay on topic and avoid personal attacks and responses to personal attacks

 

[billybob99]

Will need a good IP lawyer - register Europe and Worldwide.

Yes indeed, this is again out of my comfort zone but that is what the VC is there to help with.

 

[NickGrogan]

Which VC is this? I'd be interested in talking with them, if they've got £500,000 to invest in ideas.