Reverse Vesting Mechanism. Isn’t it a red flag??

Hello r/startups

I am curious about the legal standard in startup contracts called a reverse vesting mechanism. Why is this a norm? Why are so many founders okay with signing away such power in their venture, and doesn’t this lead to lots of founders getting kicked out of their own companies? Thanks so much!

submitted by /u/technonymous1
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Startups – Rapid Growth and Innovation is in Our Very Nature!

Osinbajo to young Nigerians: Reverse negative impact of Covid-19 pandemic through innovations – Encomium

Osinbajo to young Nigerians: Reverse negative impact of Covid-19 pandemic through innovations  Encomium
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Be Innovative, Reverse Negative Impact Of COVID-19, Osinbajo Tells Youths  Channels Television
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Osinbajo to young Nigerians: Reverse negative impact of Covid-19 pandemic through innovations – Encomium

Osinbajo to young Nigerians: Reverse negative impact of Covid-19 pandemic through innovations  Encomium
“nigeria startups when:7d” – Google News

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Osinbajo to Young Nigerians: Reverse Negative Impact of Covid-19 Through Innovations  The News
“nigeria startups when:7d” – Google News

Looking for horror stories about convertible debt, reverse mergers, and/or merchant cash advances

I'm compiling a list of startup financings that went wrong for founders, ideally, stories of financings that went horribly wrong.

I've got companies that chose to bootstrap and found themselves driven out of business by venture-backed latecomers, venture-backed founders who got diluted down to 2% (ahem, Pandora, ahem), companies that took venture debt and then failed when a dip in revenue led the lenders to seize their bank accounts (ChaCha), and others.

Can anybody share horror stories for founders and early employees stemming from any of the following?

  • Convertible Debt
  • Reverse Mergers
  • Merchant cash advances/Factoring

submitted by /u/CentralHarlem
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Startups – Rapid Growth and Innovation is in Our Very Nature!