When a venture fund that's known to be "rapacious" offered to lead Fertik's second round of fundraising, the two parties agreed to honor the price for a two-week period while Fertik shopped around for a better deal.
Reputation.com's Michael Fertik didn't listen to his gut when he chose a venture firm to finance his company.(LinkedIn)
However, in the end, the company decided not to adhere to the agreement:
"At this point, the worm turned. Smelling my diminished leverage, and going expressly against their word, the original fund insisted that the deal required new terms, claiming that market conditions had changed so much in that two-week period that the adjustment was justified. Of course, as you can imagine, there was no material market condition change in that fortnight of any kind at all, either on the public or private markets."
"And they had pushed me to my limit. For the first time in my working relationship with them, I decided to stand up squarely for myself. I quietly and firmly told them that that I would not accept those terms. I went further. I told them that if they went back on their word to me, I would make sure every single young entrepreneur inside and outside New England would know what they had done."
"Bottom line: there’s just a way to be a human being, even and especially in business, and being around people who plunder your good intentions doesn’t interest me. It’s also why I’ve made it a personal mission to educate young entrepreneurs. At least when they make mistakes – as we all inevitably do starting out – their eyes will be wide open and watching for the biggest pitfalls."
Source: LinkedIn
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