Should Founders Offer to Return VC Money if the Startup is Failing?
This is a common dilemma faced by many entrepreneurs, including myself. In the early days of Adobe Sign / EchoSign, when my co-founder left and growth stagnated, I considered returning the remaining funds to my investors.
However, upon offering, the response I received was a resounding “No Need. Keep Going.” This encouragement from my investors, despite the challenges we were facing, motivated me to persevere and gave me a renewed sense of commitment.
Similarly, Stewart Butterfield, the founder of what would later become Slack, also contemplated returning funds after a previous venture failed. Yet, his board urged him to continue, believing in the potential of a new product, which eventually led to the success of Slack.
Today, I observe a different trend among founders where some are reluctant to consider returning funds even when their business is struggling or not generating revenue. While this may be acceptable in some cases, there is value in acknowledging when a venture is not working and having the courage to discuss returning funds.
Offering to return funds can be a liberating and inspiring decision, signaling a willingness to take responsibility and make necessary changes. Whether investors advise to continue or request the funds back, it can provide clarity and direction for the future of the startup.
