Finance

In a second investment round, can the managing founder protect his equity in the company if he does not invest?

min read
Opinions expressed by Entrepreneur contributors are their own.
Depending on the term sheet you signed when you first invested in the company, you may have the right to invest in follow-on rounds without diluting your equity. However, if you choose not to invest in subsequent rounds, you may very well find yourself owning a smaller piece of the company than you do now. My advice is to check with your attorney and see what anti-dilution protections you were originally granted. If you decide to try to re-cut your deal with your partners, it's better to have that discussion sooner than later.

More from Entrepreneur

Are paying too much for business insurance? Do you have critical gaps in your coverage? Trust Entrepreneur to help you find out.
Get Your Quote Now

In as little as seven months, the Entrepreneur Authors program will turn your ideas and expertise into a professionally presented book.
Apply Now

One-on-one online sessions with our experts can help you start a business, grow your business, build your brand, fundraise and more.
Book Your Session

Latest on Entrepreneur

My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.