Founders: how to prevent getting fired by the board after raising a few rounds of financing (with dilution of your ownership)?


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Once you raise a few rounds of capital, your equity ownership most likely gets diluted to a minority stake. There is nothing that stops the board from firing the founder at this point. How do you mitigate that risk and still be able to raise those rounds?

Board Equity Founders Financial Dilution

asked May 27 '14 at 23:13
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Joshua Propp
11 points

1 Answer


2

1) Don't do anything worth being fired for.

2) Understand how the CEO role changes at different company stages, and have a plan to either grow at every level, or shift to a role that better suits you.

Most investors aren't out to replace you, and definitely don't want to kick you out. But you do need the best person for the job at the head of the company at all times. You can either:

  • stay that person (through classes, coaching, mentorship) to gain skills at high-level management, understanding financials, being able to navigate your industry, etc.
  • figure out the ideal transition for you to bring on a great CEO while you move to another C-level role, a less-involved chairman position, or a role hyper-focused on one element of the business.

It's a difficult transition, one way or another. Check out http://startupmanagement.org/lexicon/founder-to-ceo/ for a lot of good reading from founders and VCs.

answered May 30 '14 at 18:50
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Jay Neely
6,050 points

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Board Equity Founders Financial Dilution