Worried about due diligence, didn’t tell investors everything.

Seed stage funding from an accelerator. We don’t own the IP to the MVP. No one does. Need to rebuild anyway. But they think we own the IP. What shall we do?


  • If you’re planning to file a patent the IP is important. Otherwise junking the MVP and building a new one isn’t an issue. However you may have a problem like FB/Snapchat if people who built the MVP can claim to own part of the company.

  • I would tell them everything. The truth always surfaces. We’ve had recent potential investors getting references for our references ( I sh*t you not). If they look hard enough, the’yll find it.

  • I don’t understand what you’re saying above: that the MVP is not yours, was not built on contract for you, isn’t actually yours, what?

    While it doesn’t necessarily make sense to expose all to investors PRIOR to investment, if you’re still doing this after investment or with tangible offers on the table, this is something that can get you burned forever in the investor community. Startups and their investors need to be very tight – unless you are absolutely, 100%, die if you’re wrong certain that you won’t need them to help you with intros, contacts, future funding, etc.

    However, if you’re referring just to the incubator/accelerator, whatever. Those guys are lending you their name and a little cash in return for a lot of equity (relatively) – and the game there is numbers. A normal angel investor theoretically needs about $1M for 25-$25K investments (the rest is for followon capital for those which look like they’re going to succeed). An incubator or accelerator is investing usually significantly less in absolute terms, is getting relatively more compared to typical seed in equity terms, but seeking a similar odds covering spread, but trading off a lengthy relationship for more churn.

  • “While it doesn’t necessarily make sense to expose all to investors PRIOR to investment, if you’re still doing this after investment or with tangible offers on the table, this is something that can get you burned forever in the investor community. ”

    Call me naive, but if I am your Investor and find out that I’ve been fooled… I would get properly mad and try to replace you ASAP.

    The Q is how much power Investors have these days????

    • Investors have all the power – unless your startup is already so powerful and mature that you don’t need money, connections, or anything else.

      And if that’s the case, why are you even looking for investors?

      • wait… I meant more in practical terms..can Investors literary say CEO got to go because he/she is not capable of leading the company?

        • They cannot say that, but they can do that. When CEO is not capable, the startup does not run smoothly. One day or another, the company needs money or go bankrupt. This day, investors can say ok for more money, but only if CEO goes. CEO can go bankrupt or can go out. Usually they go out.

          • I will read this every day before sleep as a prayer.

            I hope this manic CEO will go soon or the idea will go bust.

            Puzzled to see how long VCs will tolerate it. I guess it depends on how quickly they expect turn over…time will tell.

            p.s. hope not to get mental prior to the resque

  • If you need to rebuild it anyway and the $$ has come in, I’d rebuild it and move on. Many startups come with “baggage” but if the idea/team is strong, VC’s accept it and continue.

    Facebook, Snapchat, RockYou (former company owned the IP) are just a few of the companies that came with big hairy skeletons (much more than just MVP IP issues) that once it came out in the open, the investors continued to support the original founders.

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