If you were screwed by a tier 3 (or 4) VC firm, and had good grounds for a lawsuit — would you sue them?

The founder/CEO was recently ousted from a startup and there were numerous infractions made by the lead investor during the course of events. In the end, the founder refused to sign their severance agreement, thus forgoing his accelerated vesting.

If you were in such a predicament and had the means, would you sue the firm? Do you think there would be future avoidance or retribution from other VCs?

  • If you don’t list the infractions how are we to provide any advice? Ousting the CEO is not an infraction even though it could be a dick move.

  • Unless you’re talking about a felony, let it go. But, do take some benefit from the situation by doing a post-mortem. Review your assumptions, discover where you might have played your cards differently. If this was football, you’d have game tapes to watch. Since its not, rely on your memory, records, etc. Involve a trusted mentor or board member and extract the learning. It will make you a more formidable opponent in your next bout. That’s what I did.

    PS: It’s advisable to (briefly) macerate in the anger, frustration, sadness and the rest of the emotional soup – but then let it all go, and don’t bad-mouth the vc.. People will judge you less for your mistakes and more for how you behave in the face of them.

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