As I understood it if you incorporated wouldn't the company be liable for the money and not you personally? I don't know for sure so I'm curious to hear from someone going through it.
Hello George Offley, Well this is a very relative discussion, at the end of the day everything depends on your contract. Here in Brazil, the majority of Startup investment contracts set a minimum time for the company returns the money. In our case we don't have to return any money, we sold some % of our Startup so now the investor is one of our associates but if we don't finish the MVP we need to pay him back.
Anyway, how I said before, we're doing a great work and we're months ahead of the plan, and we really needed this cash for new employees, server expense etc.
It's not really relative, there are corporation laws that protect entrepreneurs from investors and vice versa.
As George already mentioned, you should incorporate to protect yourself from personal liability.
You said in your case you don't have to return any money, but then you go on to say that if you don't finish the MVP you need to pay the investor back? Do you personally have to pay the money back or does your company have to make the repayment? Hopefully it's the latter.
I'm confused on how you would be personally liable. It seems like a crazy disincentive against allowing VCs anywhere near your company. Businesses fail all the time, and investors lose money. I'm confused how you would somehow be liable for possibly millions of dollars in lost funding.
Hey, thanks again for the comment. Well, I'm not a lawyer or such a thing, but I'm aware that law is different depending which place you talk about, so I guess that law itself is something really relative, don't you agree? And perhaps I didn't explain it clear enough, but what I was trying to say is that here, in Brazil, the majority of contracts say that the Startup should return some money provided by sales, and in our case, we only need to return the money if we don't finish the MVP
In our contract, it works like this, we need to finish our work in order to justify the investment. But like I said, it's how our contract works, and for a lot of reasons that I didn't mention in this article, it was our best choice. But it's how I said, it's a really relative discussion, it all depends on your contract, and about the law stuff, I can ask our lawyer about, but it's really not the point of my article, actually, this post is about tech concerns when you need to hurry up and secure your production
But it's quite useless to discuss this with me, I know it may be strange because law it's very different around the globe. So I can't discuss what is right or not after all this is different between our countries, the best I can do if you're really into this, is send a copy of our investment contract.
But please, let's not argue about my contract using another region's law definition, it's pointless
Greetings fellow Brazilian! Just thought I'd clear it up what they're saying. They didn't contest local laws regarding whether or not they're valid.
What they're saying is that when your company receives such an investment deal, the legal burden to pay back that sum of money falls on your company, and not on you as a person.
That's the difference of having to pay back using your personal assets (money and belongings), or your company's assets (money/equipment).
Hey, thanks for the comment. I understood that part haha, but what I trying to say is that in our contract the payback falls on us as people not as a company. But it a really hard thing to explain without telling the whole story behind our deal, and it's not the focus of my article.
Anyway, thanks very much for the comment.
People here are just worried about the risk you guys are going through, but obviously you guys are well aware of the risks and have an idea worth pursuing :)
Good luck to your team and hope to see your product out there soon (write up another post when that happens! A bit of shameless self-promotion never hurts anyone)
As I understood it if you incorporated wouldn't the company be liable for the money and not you personally? I don't know for sure so I'm curious to hear from someone going through it.
Hello George Offley, Well this is a very relative discussion, at the end of the day everything depends on your contract. Here in Brazil, the majority of Startup investment contracts set a minimum time for the company returns the money. In our case we don't have to return any money, we sold some % of our Startup so now the investor is one of our associates but if we don't finish the MVP we need to pay him back.
Anyway, how I said before, we're doing a great work and we're months ahead of the plan, and we really needed this cash for new employees, server expense etc.
It's not really relative, there are corporation laws that protect entrepreneurs from investors and vice versa.
As George already mentioned, you should incorporate to protect yourself from personal liability.
You said in your case you don't have to return any money, but then you go on to say that if you don't finish the MVP you need to pay the investor back? Do you personally have to pay the money back or does your company have to make the repayment? Hopefully it's the latter.
I'm confused on how you would be personally liable. It seems like a crazy disincentive against allowing VCs anywhere near your company. Businesses fail all the time, and investors lose money. I'm confused how you would somehow be liable for possibly millions of dollars in lost funding.
How do incorporation work in Brazil?
Hey, thanks again for the comment. Well, I'm not a lawyer or such a thing, but I'm aware that law is different depending which place you talk about, so I guess that law itself is something really relative, don't you agree? And perhaps I didn't explain it clear enough, but what I was trying to say is that here, in Brazil, the majority of contracts say that the Startup should return some money provided by sales, and in our case, we only need to return the money if we don't finish the MVP
In our contract, it works like this, we need to finish our work in order to justify the investment. But like I said, it's how our contract works, and for a lot of reasons that I didn't mention in this article, it was our best choice. But it's how I said, it's a really relative discussion, it all depends on your contract, and about the law stuff, I can ask our lawyer about, but it's really not the point of my article, actually, this post is about tech concerns when you need to hurry up and secure your production
But it's quite useless to discuss this with me, I know it may be strange because law it's very different around the globe. So I can't discuss what is right or not after all this is different between our countries, the best I can do if you're really into this, is send a copy of our investment contract.
But please, let's not argue about my contract using another region's law definition, it's pointless
Greetings fellow Brazilian! Just thought I'd clear it up what they're saying. They didn't contest local laws regarding whether or not they're valid.
What they're saying is that when your company receives such an investment deal, the legal burden to pay back that sum of money falls on your company, and not on you as a person.
That's the difference of having to pay back using your personal assets (money and belongings), or your company's assets (money/equipment).
The issues they raised aren't region related
Hey, thanks for the comment. I understood that part haha, but what I trying to say is that in our contract the payback falls on us as people not as a company. But it a really hard thing to explain without telling the whole story behind our deal, and it's not the focus of my article.
Anyway, thanks very much for the comment.
Ah totally understood what's happening here then.
People here are just worried about the risk you guys are going through, but obviously you guys are well aware of the risks and have an idea worth pursuing :)
Good luck to your team and hope to see your product out there soon (write up another post when that happens! A bit of shameless self-promotion never hurts anyone)
Thanks mate! And yes! For sure I'll post something about my app