How Entrepreneurial Dreams Are Lost When Investors Take Over Startup

Fights, ousters and exits are likely to occur when the management of a company takes over from its founders. This is because founders and managements don’t often think alike.

In most cases, the board is run by investors who pump in large amounts of money to fund initial growth and compensate for losses. “Once they hold beyond 35% to 40% stake in the company, investors start pressing for approvals and other decision-making responsibilities,” said Sanchit Vir Gogia, Chief Analyst and CEO of Greyhound Research.

“At that juncture, a lot depends on the relationship shared by the CEO or the founders with investors,” said Gogia.

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