Qubit: Research on VC Fiduciary Duty
As a founder, keep in mind that your board has a fiduciary duty to ALL shareholders.
Not just to your main investors.
“Before Trados, Delaware law was more friendly to preferred shareholders – allowing a VC-controlled board to make decisions that favored the preferred shareholders at the expense of the common. Post-Trados, all else equal, common shareholders are able to credibly threaten directors with fiduciary duty litigation since the Trados ruling requires the board to favor the interests of common shareholders. This ruling empowers common shareholders to potentially hold up a sale, thus affecting the probability of VC exits through acquisitions, especially when VCs move closer to maturity and experience greater pressure to liquidate their investments.”
Source:
Conflicting Fiduciary Duties and Fire Sales of VC-backed Start-ups
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