- You’re a founder
- You own roughly a third of the company, alongside two other founders.
- Things are going well
You’ve built traction. Customers care. Revenue is coming in. Then a serious investor shows up. Smart. Experienced. Well known.
- They offer to lead your Series A
- They also suggest a law firm
- A big one. A powerful brand
“Use them,” you’re told. “They’ll handle everything.”
- The company pays the firm
- The deal moves fast
- You’re excited. Proud. Relieved
- And then the documents arrive. Hundreds of pages
It’s late. Funds are scheduled to land tomorrow. Everyone is aligned. You skim. You sign.
What you don’t realize is that this moment—not the exit, not the firing, not the dispute—is where most founders lose control of their company.
- Who Was That Law Firm Acting For?
- The firm represents the company
- Not you
- That distinction matters more than most founders realize
- Company counsel’s job is to close the financing
- Not to protect minority founders
- Not to preserve internal balance
- Not to explain how power or control quietly shifts.
- Sophisticated investors already know what they’re getting
- Minority founders often don’t
- What Did You Actually Sign?
- Most founders remember valuation and dilution
- They forget governance
Here are the questions almost no one asks at signing—but every displaced founder asks later:
- Did you give up your board seat?
- Did you give others the power to remove you from the board?
- Did investor directors gain veto rights over your role?
- Can you be terminated as an employee “without cause”?
- If you are terminated, what happens to your shares?
- Did vesting restart or accelerate against you?
- Is there a repurchase right on your shares? At what price?
- Who controls future financings—and dilution decisions?
- None of these clauses look dramatic in isolation
- Together, they change who owns the company in every meaningful sense.
- “But These Were Market Terms”
- This is where things get dangerous
- “Market” does not mean neutral
- “Standard” does not mean fair
- “Everyone signs this” does not mean you should
These provisions often benefit exactly who you’d expect:
- Preferred shareholders
- Institutional investors
- Those with negotiating leverage
- They rarely benefit minority founders who assume alignment will last forever.
- The Fatal Assumption
The biggest mistake founders make is assuming:
“If something bad happens, we’ll deal with it then.”
- By the time “then” arrives, the documents are already doing their job.
- You may still own shares
- But not control
- Not influence
- Not security
- You didn’t get pushed out
- The paperwork made it easy
- The Lesson
- This isn’t about distrust
- It’s about asymmetry
- Investors know these documents
- Big firms optimize for deal efficiency and repeat relationships.
- Minority founders often sign blind
If you are a founder signing a Series A:
- Slow down
- Ask governance questions, not just economic ones
- Get independent legal advice
- The cost of a second set of eyes is trivial.
- The cost of not having them can be your company.