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:
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They will prohibit vacation or send everyone away.
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Your salary will come late.
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Various people you haven’t seen will visit the office.
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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:
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Some investors will write off losses to save on their taxes.
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Others will try to sell any tech or other properties the startup has managed to create to recoup losses.
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Creditors and bond holders will be paid first before stock holders. Most vc funding comes in exchange for stock.
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