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In SV fundraising deals, going back on a handshake is considered pretty bad behavior. Investors stand to lose many future deals if they break one without a darn good reason. Discovering a serious misrepresentation is such a reason, but seeing a better deal elsewhere is not.

The point of handshake deals is to give everyone time to get the details right, without the pressure of having the deal stolen. Forcing parties to rush through the details damages the whole ecosystem, so everyone is motivated to encourage everyone else to respect handshake deals.



That happened to us and on this VC firm's maiden round. They offered no reason except that they reconsidered. Wasted months of our time.

Our attorney (from Fenwick & West) told us the same, that it would damage the VCs reputation and that this was pretty much unheard of for them.

But I never heard another thing about it and that VC firm seems to not be having too much trouble filling out their rounds.


I did not know this raising my last round, but it was legit. The money was as good as wired.




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