What happens if things go wrong - for example, if they invest, but I subsequently find I cannot comply with the agreed terms?

 

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Keith Ainsworth

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12. What happens if things go wrong - for example, if they invest, but I subsequently find I cannot comply with the agreed terms?

Start talking. Venture capitalists and business angels know that some of their investments will give them problems. What they really do not like is being kept in the dark. So tell them what is happening, and what you propose to do about it. If they are not happy with your explanations and proposals, there will be very little that minority shareholders can actually do - apart from dumping the shares for the best price they can get, and passing the word around. (That could blight your attempts to raise new capital for years to come, so do not take it lightly.) If your outside investors hold debt, however, they may (depending on the terms), be able to force you to repay it. Whether they will do it will depend, at least to some extent, on whether they think you are reliable and trustworthy, and are prepared to back your efforts to turn the situation around.