Lost control of company to investors. What should I do?

I’ve lost control of the company I founded 8 years ago to angel investors. They want me to sit quietly in the corner while they run things, but they don’t ask me for anything and I can see them spinning their wheels. I just want to walk away from this and focus my energy on productive pursuits elsewhere, but I don’t want to abandon the early investors (family/friends) who believed in me. What should I do? Is it hopeless once investors have taken over?

  • Lawyer up, review your options. Perfectly understandable if you leave because you cannot have any control or give meaningful leadership; key is to do so in least negative effects (on you and your crew).

  • Are the angel investors 100% united? If so, you’re out of luck, and you also made an error in having power investors who know each other better than they know you.

    If they’re not, you need to start playing the game. Find those who are closer to your own views – build back your credibility and build up allies.

    You had your turn and evidently did not succeed. Now they have theirs – if they fail, the door is open again for you to take another shot.

    But because of the first failure on your part, you need to show that you can do better next time. Be humble, show how you’ve learned from your first mistakes and build a credible successor plan for if/when the angel plan goes nowhere. As part of this process, push hard for measurable performance metrics – presumably like was done to you.

    You may not be in control anymore, but you are presumably still a major equity holder.

    This role isn’t the same as the end-all, be-all you used to be in, but still has plenty of influence.

  • 1] Talk to some people who have ‘founded’ their own startups. Dont talk to people who have an opinion but haven’t been there.

    2] Don’t do nothing. It wont fix itself.

  • Wow this is tough, but before you get some lawyers, ask your self, do you have the money or the energy to do this. Are you so crazy about this company. If most of the money was put in by these investors, then what you have is simply a blow to your ego, and a hard lesson learned. Life will keep giving you knocks. Even marriages crumble and people get cheated. If you can get yourself back onto your feet with a fresh perspective on life, you haven’t lost much.

    I recently had to shut down a 6 yr old business and lose a ton of money all because my dad died. I don’t want to go into the gory details, but wow my life has changed and I’m a happier person today with a fresh outlook.

  • I’ve been there. It’s tough. Part of it was my own mistake. I played ball like this for nearly half a year, but it was eating myself up how the investors and the new CEO were running the company that I was considered my baby.

    There honestly isn’t much you can do if the investors don’t believe in you anymore and have taken control. It will just destroy you if you keep going like this.

    If anything, explain this to them and ask them to buy you out and then leave, but offer transition should you have any meaningful responsibilities at this point.

    In the worst case, you will have to quit and take the loss. That’s what happened to me. But it was a big relief nevertheless. I’m building now my next venture, and next time I know better.

    Just my 2cents.

  • I am the original poster. I want to thank everyone who has taken the time to comment. Your thoughts and suggestions are very much appreciated at this difficult time.

    I would like to provide some additional information, in case anyone has more to add:

    Unfortunately, I am in terrible financial shape at this point in time, so lawyering up is not a viable option.
    I am still the largest shareholder, but due to the financial pressures I would sell my shares in order to get out and just move on.
    I never wanted to run the company. I just did by default as the founder, because I couldn’t find anyone qualified for the job.
    I am a technical person, and I am happiest doing technical stuff. I offered to become the CTO, but I was shocked when the lead investor told me the company did not need a CTO.
    The person the board hired to run things comes from a large multinational corporation, has never run a startup, has never raised investments, and has no skin in the game.

    Again, thank you for all your responses. I’m so glad I found this site. 🙂

    • Tough situation for sure.

      If you were looking from the outside, do you think your board is qualified to run the company? Maybe you can reframe your current position and learn as much as you can from what they’re doing. It’s always good to ask questions in a non-threatening manner. As silly as it may sound, a lot of my experience and management style is based on what I learned not to do from horrible management and bosses I’ve had in the past.

      One thing to note is that the larger the company gets the more you have to manage than code. For companies who have CTOs who still code, thats a great scenario but I’ve had many friends who were promoted from an Engineering role to “Management” and hated it because they knew their place was deep in code, not dealing with operational stuff. Ultimately, you have to see what you see yourself doing in the next 3, 5 and 10 years. If you’re running a company, you have to run the business. Having technical chops are great but if you cant close a deal, be the face of the company, etc, then you may face similar challenges in your next start up. So if its possible, try to take it as a learning opportunity and push your pride aside.

      Lastly, how is your board selected? It is possible to fire the board but it all depends on your legal structure. Take a look at your contracts or whatever you have in place and see if you can find an out. If you’re the majority preferred share holder, then you may use that to your advantage.

      I wish you all the best and hope the community here can keep you sane.


    • Talk to existing investors and/or the new CEO about selling your ownership if you really don’t have the interest and need to money.

      Don’t be terribly surprised if you get a really low-ball offer though.

  • You mean you gave away control of your company. When you sold your shares or gave options or w/e.

    The minute you sell your company (even just parts of it), it’s not your company anymore.

    Talk to your shareholders about the situation openly and see where both of you stand. Check your vision & strategy with them. If they are not matching, either one has to modify his/her position. If not, there’s only one way out.

  • I’m glad you posted this question to the board. I haven’t yet taken on outside investors, but was considering doing so. This gives me pause…

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