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January 16, 2017

[Video] What happens if the startup does not meet the milestones? – Bobby’s Minute, ep.85

Long story short: it all depends on the investor agreement that you (should have) signed.

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Transcript:

If a startup doesn’t meet the milestones agreed upon with the investor, can the investor withhold the payment? Well, it’s really up to the investor agreement that you signed. If you signed the document saying that you only get the money if you meet some milestones that you agree upon with the investor, well, it’s not really too much talk about, right?

Yes, the investor can withhold the payment. The thing is though, in my experience at least, the investors want your company to succeed. They don’t want you to fuck up because this is how they make the money. So, if you go to the investors with good reasons, if you have a good explanation for why you didn’t hit the milestones, most of the investors will give you the money anyway because, again, their purpose is to help your company succeed.

If you don’t have good reasons, if the milestones that you proposed were too big or anything, that can show that you’re actually not good at what you’re trying to do, then you have a problem.

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