Ex-Professor Says Dismissed Racketeering Case Is Still ‘Devastating’ | Hacker News Reader

Ex-Professor Says Dismissed Racketeering Case Is Still ‘Devastating’

nytimes.com

160 pointsmtg80 comments

The original story explains how this was likely a jealous colleague at GT, who called in the state guns to get revenge. The prosecutor's extreme delay and then "accidentally" losing the case on a "miscalculation" of statue of limitations was because they had no case and were too embarrassed to admit it.

If there were justice here, charges would be brought against whoever in the university demanded this malicious false prosecution.

A case of "no skin in the game." Neither the prosecutor nor the snitch had anything to lose.

Fortunately academia is populated by self-less souls searching for absolute truths only.

I always wonder why the jealousy is so strong in those circles, it's not as if there is much at stake other than reputation and ego. I've seen quite a few examples of this in real life by now and it's much worse than industry in some ways.

Ego/jealously know no bounds. Society should really try to get a handle on it as a 'group effort'.

"Academic politics are so vicious precisely because the stakes are so small."

[1] http://quoteinvestigator.com/2013/08/18/acad-politics/

The lower the stakes, the more vicious the infighting.

People will do disgustingly stupid things to chase meaningless internet points. It's understandable that more real world intangibles like reputation would see similar actions.

The responsibility to determine whether the state has a reasonable chance at winning a trial prior to requesting an arrest warrant falls squarely on the shoulders of prosecutors. Because the stigma and expense of even a failed prosecution like this one is so extreme to the defendant, there need to be consequences for prosecutors when they proceed with cases where the statute of limitations has clearly expired or other obvious problems barring a successful prosecution exist.

Unfortunately, prosecutors cannot be put in jail for being utter failures at their jobs, and successfully suing them is nearly impossible, so these people got away with seriously damaging someone's life and career for nothing. It happens everyday throughout the US at both the state and federal levels. Sadly, until laws are changed to allow jail time for willful prosecutorial misconduct, it will keep happening.

I don't think it's correct to say that the statute of limitations has "clearly expired." The alleged fraud included among other things having invoices his company owed submitted to GT for payment. The dispute was about whether the statute of limitations ran from when he put in the orders or submitted the invoices, or when GT later paid them.

I also don't think it's fair to presume bad faith on the part of the prosecutor. Outside the loosey-goosey world of incubators and academia, having your employer pay off invoices for your side business (or personal expenses) is classic white collar fraud.

Yeah, everyone but Laskar (even other profs in the article) pretty much agree that he stole $50k. See the quotes from peers saying that eg this was an overreaction, or that their university would have handled it internally, but that all agrees with the facts. Laskar stole $50k. Maybe other places slap people on the hands for doing that, but that doesn't make this prosecution wrong.

The fact remains, Laskar stole the $50k. And as for prosecutorial misconduct, if you discover someone stole $50k, it's nothing like misconduct to go see what else he or she may have stolen.

>The fact remains, Laskar stole the $50k. And as for prosecutorial misconduct, if you discover someone stole $50k, it's nothing like misconduct to go see what else he or she may have stolen.

If it is a fact then why was he not charged with stealing $50K? It should have been pretty easy to get a conviction. Many have been convicted for stealing far less.

Prosecutorial overreach is a huge issue at all levels of society, particularly when applied towards youth to an extent that it perpetuates a cycle of crime; it should come as a surprise to none that this disproportionately affects communities of color.

The problem is deep: Because prosecutors are elected, by an electorate made of those who fear criminals more than missteps of the criminal justice system, they are instantly biased towards fearing the perception of being "soft on crime" above all else, above even the instinct and professional duty to be fair in their evaluations. Ken White (author of the Popehat law blog) eloquently describes from personal experience the caustic, self-feeding culture of the "brotherhood of prosecutors" that ingrains this trend, a must-read for anyone interested: http://reason.com/archives/2016/06/23/confessions-of-an-ex-p... And this article expands on the problems behind electing prosecutors: http://www.thedailybeast.com/articles/2015/08/24/it-s-too-da...

I once asked a question at a panel about whether technology could help to rein in this culture: whether, for instance, easy access to statistics might allow a prosecutor to justify to their peers and the public that they could give certain individuals the benefit of the doubt... that they might press for less than the maximum sentence permissible by law, because the data shows they are statistically unlikely to be repeat offenders or escalate into violence, and that the individuals' contribution to society would be maximized by behaving firmly but fairly as a prosecutor... that they should take into account that the system is stacked in their favor, and that they should not just assume that public defenders have equal adversarial power, in making their decisions. (It's more than a little absurd that the former sentence isn't already the case.) I should have anticipated the answer: such a tool would be tremendously helpful, but to exist, it would require belief and cooperation and adoption at levels not yet seen, a classic chicken-egg problem. I hope thoughtful minds, with more insight into this problem, find a path forward.

How about having the prosecutor put up a bond that goes to the defendant if the case is cleared?

Ah, but what politician would argue for such a law that would hobble our "brave defenders of law and order"? Imagine the TV spots! (And pay no mind whether the private prison industry is funding the PAC that put them up...)

This would give too much incentive to the prosecutor to do unethical things to secure conviction once they've brought the case.

They already have tremendous pressure to secure conviction - I'm don't believe this would encourage even more unethical things.

Then you have a very naive view of just how bad things can get.

These guys don't get paid particularly well. Requiring something like this means that they'll decline to prosecute anything risky. You'd literally have zero rape cases litigated.

Or to bring prosecutions against friends who whould split the bond with them under the table. (You don't think that the prosecutors would have to put up their own money, do you?)

The solution is not to elect prosecutors (or judges, same reason).

Almost no countries worldwide elect judges or prosecutors, that is to say, this is already a solved problem almost everywhere on Earth except in the USA.

No need to spend a lot of time thinking about a solution when an excellent one already exists and is deployed widely.

It's like people worried about writing a secure program but still picking C as the implementation language.

Which is to say, terrible if you think that's all that matters but sensible once we consider tooling, portability, productivity, and network effects.

I don't think you can make such a universal statement. It depends on the software being constructed and the purposes to which it will be put.

Context probably matters, granted. That said, I was responding to a universal condemnation of C, so it seems reasonable to respond in kind.

I disagree.

The current atmosphere has more to do with having too much money in policing where prosecutors hold a leading role. Many district attorney offices are dependent on seized property to function, so a cozy relationships and keeping the vote from rocking become important.

Personally, I prefer elected judges and prosecutors. Leaving things in the hands of the people will always be a better outcome than letting political hacks decide.

Those are not the only possible options. In many countries judges get their positions by a technical competition. Also in my country the case is built by a judge, even if there is a DA during the trial. I think they're going to change that, unfortunately... we suspect the reason is putting political corruption cases in more friendly hands.

Climbing the career ladder is managed by an entity formed by judges... in theory. In practice Constitution is ignored and politicians chose a good number of its members.

Seized property seems like total madness.

>Leaving things in the hands of the people will always be a better outcome than letting political hacks decide.

In most parliamentary countries this is not the case.

In Australia, specifically the state of NSW, the judges are appointed by the Governor who goes with the suggestion of the Attorney General (by convention, not requirement), and while the position of Attorney General is not directly elected each member of cabinet has to be elected by the public.

To make sure allegations of corruption are independently assessed, there is an Independent Commission Against Corruption, or ICAC, that can investigate individuals for corruption in a public office.

The checks and balances are pretty broad in that model, and there's no risk of appealing to fallacies which can happen in the direct election model e.g. appealing to 'common sense'.

In Brazil there is a technical competition to ingress the career (both for judges and prosecutors). Often there are 100 or more candidates for each available chair.

The problem here is that judges are unaccountable: a judge can have 100% of his decisions reformed in an upper court and keep working. In a sane system he would be fired.

Great article, I hadn't come across that one yet.

But I also think he's part of the problem and doesn't even realize how.

> Even as Americans are facing the ruination of their lives at the hands of prosecutors, even when they're innocent, even when they're being mistreated by the government, they're still skeptical of defense lawyers and trusting of prosecutors. They prefer to hire a former federal prosecutor because they don't want to think of themselves as someone who has to hire a criminal defense lawyer

Uh... no? How out of touch do you have to be to believe this? You get an ex-prosecutor as your defense attorney because he understands how to work a corrupt system, and hopefully can do some wink wink nudge nudge stuff with his old drinking buddies still at the DA office.

I certainly am not a lawyer, but I've been involved with enough legal cases to understand this is generally the case. No one is hiring an ex-prosecutor because they "don't want to think they need a defense attorney" - come on man! They want to get the best chance they can, and know the system is entirely corrupted from it's original intent and stacked against them. So you play as dirty as you can as well.

I think this guy sort of gets it. But he's being far too lenient on his past self, as well as current prosecutors. His bank robbery story made my skin crawl - and he saw nothing wrong with it in the end (apparently).

The road to hell is paved with good intentions.

Your suggestion about the statistics would naturally start giving one group less jailtime for the same crime than other groups, and at some point the policy themselves would start affecting the statistics.

It's the kind of thing that lends itself to groupthink and digs itself so deeply into people's minds that fixing the wrongs that would be created by this system becomes extremely difficult.

I think the overreach has less to do with 'we fear criminals' and more towards a large body count of prosecutions leads $$$ (great paying government jobs, book royalties, etc.)

take away the huge financial incentive, the overreach will diminish even in the presence of fearing criminals over criminal injustice.

Most of the damage was done by his employer for firing him and others for misjudging him. Simply being accused of something doesn't mean we should punish that person in advance.

Agreed; There are structural problems with no obvious solution in the justice system. However, there is one thing people can do - adjust their expectations and biases using information of the system's corruption.

And this is why I make it a point to sincerely believe in the innocence of every person not convincingly convicted of a crime, and even extend compassion to those who were found guilty for the panoply of reasons for which the jury / prosecution / system might have been rigged / biased / broken.

It seems like we make sport of being able to determine the guilt or innocence of people from the comfort of our homes, armchair style, and I do my level best to ignore those discussions wherever possible, or to chime in only for the purpose of reminding them that in America at least, we're supposed to be deemed innocent until proven guilty, and that we aren't privy to proof. Moreover, I subscribe to Blackstone's adage that it's "better to let 10 guilty persons go free than one innocent person suffer."

If more of us were willing to extend such grace to those accused of crimes, perhaps fewer people would have their lives ruined by the wake of a wrongful allegation.

I assume this is one-sided, but since Dr. Laskar didn't get to present his side of the case in court, I believe it's appropriate to link to it: http://joylaskarstory.com/chronology/

>For one thing, a state grand jury didn’t indict him on racketeering charges until late December 2014, more than four and a half years after the raids on Dr. Laskar’s home and office in May 2010.

The delay in indictment aside, it appears they've been holding his personal devices hostage for nearly seven years now.

>He had previously remained silent to avoid antagonizing prosecutors, who still hold family items with sentimental value, like a laptop with the only copies of childhood photographs of Dr. Laskar’s three daughters and an unfinished novel by his wife.

Theoretically, not speaking up offers the prosecutors more incentive to retain possession, especially if they know that's the reason for the silence.

Device seizure without prompt imaging and return of the hardware is bullshit in all but the most grievous cases (e.g. terrorism).

While many people who have been through extended litigation or criminal proceedings just want it to end, it seems like this guy was railroaded pretty hard.

Does he have cause to sue the state, university, or both?

> Device seizure without prompt imaging and return of the hardware is bullshit in all but the most grievous cases (e.g. terrorism).

I don't think grievousness alone should be enough. Refusal to return the devices should also be predicated on some sort of substantiated belief that returning the devices would lead to some sort of harm. Possibly the case in your terrorism example; clearly not, here.

> He started chip companies on the side, which Georgia Tech encouraged, eager to see successful university spinoffs that had showered riches and prestige on Stanford, the Massachusetts Institute of Technology and other top computer engineering schools.

And now there will be no more academics at Georgia Tech working to spinoff companies that shower riches on their benefactor universities. The bureaucracy strikes again and kills innovation.

That's probably necessary in public universities.

In my region, there are two institutions with leadership that let power and influence in these areas get to their heads. First, there's private RPI, where the president is basically looting the school for a decade, but the board does nothing. Then look at the sad tale of SUNY Poly, where its president did some pretty amazing things along with some... other things that would have been survivable in a private environment but a death sentence in the public sector.

Unless you're a political person with the ability to stay at "arms length" with campaign funds and PACs, you cannot work for government entities and be safely involved with any significant business activity that is potentially related to your public employment. Even if you're able to do so, any misstep, greedy mistake, illegal act, or other screw up will be exponentially more dangerous.

Linkage:

RPI: https://news.vice.com/article/americas-highest-paid-college-...

SUNY Poly: https://mobile.nytimes.com/2016/09/23/nyregion/physicist-in-...

UC Berkeley seems to handle this process just fine.

Could you or someone possibly elaborate on this? Why does UC Berkeley have so much better luck with startups and spin-off companies/technologies when compared to other public institutions?

It has an institutional culture (in the bureaucracy) of nurturing those startups. In particular, it has a very clear and permissive procedure for transferring work to private companies (see [1], under Outgoing MTA). You tell the university what materials (including IP) you want to use in your company, and the university negotiates a direct quid pro quo.

The Georgia Tech process, by contrast, seems totally ad hoc and amateur. "You can take stuff for free up to a point, as long as you agree to certain investment agreements with the university, and if you step over one of our unclear lines we will slap you down."

[1] http://ipira.berkeley.edu/material-transfer-agreements

Also, professors do steal money. There's all sorts of guidelines at my university now about how grant money can be used because a prof in the medical school used a grant for cancer research to renovate his kitchen (more or less).

> He had previously remained silent to avoid antagonizing prosecutors, who still hold family items with sentimental value, like a laptop with the only copies of childhood photographs of Dr. Laskar’s three daughters and an unfinished novel by his wife.

Like, what the fuck? Why do prosecutors have such broad control over something that should be held by a independent party?

The justice system is so fucked.

There should be a right to copies of one's seized electronics' contents if not returned in a reasonable period.

Also, what is the justification for keeping them after the case was dismissed?

It certainly is. Many decades of misplaced public morality and "desire for justice" has turned the justice system into an apparatus that is entirely overreaching yet still tremendously powerful.

Public support for it is still there from those who use the internet a bit less and those who don't see grave injustices as anything but "i'm sorry that happened" or "they probably deserved it"

I don't mean to be fatalist but there really is no fixing this in the short or mid term; and in the long term, you would need some really mystical power to change the culture and practices

technology has exposed to us all how bad the justice system is, but technology has also made the justice system even more egregiously corrupt and powerful

>>>The justice system is so fucked.

That is because we do not have a justice system. We have a Legal System

The rules, the process, the procedure are what is important in our system. Any Justice obtained is secondary to the legal process and legal procedures

> “This wouldn’t have happened at M.I.T. or Carnegie Mellon,” said Dr. Ricketts, "... they would basically have handled it internally."

https://en.wikipedia.org/wiki/Aaron_Swartz

"On January 6, 2011, Swartz was arrested by MIT police on state breaking-and-entering charges, ... download academic journal articles systematically from JSTOR using a guest user account issued to him by MIT."

It was handled and concluded in a very un-internal way.

Totally different situation.

Yes, because Aaron was not faculty.

> Last October, a judge tossed out the state’s case before a trial, ruling that the five-year statute of limitations had expired on the misdeeds that it had accused Dr. Laskar of committing.

The way it ended didn't help. It would have been better if it were thrown out because it was obviously BS, or if it went to trial and he were exonerated.

Glad to see this finally got dismissed. I was a Ph.D student in the department when this happened and it caused a lot of discontent among the faculty. Perhaps related, GT's royalty agreement is quite a bit less generous than other schools known for their entrepreneurship, such as Stanford and MIT. This and issues like Prof. Laskar's have had a negative impact on the rate at which companies are started at the school.

Paging George Burdell

A state prosecutor missing the statute of limitations seems like a crass professional misstep that should see them sanctioned.

Regardless of his guilt or innocence, the way this was investigated, prosecuted and litigated by the state would not make me feel comfortable investing in Georgia. This is a pretty sad story for Atlanta and its ambition of becoming a center of technological innovation.

Does anyone have a pointer to the details of this case that can be read?

He was. Try reading the article.

He got off on statute of limitations.

No, he was never convicted. If you would please read the bloody title it says 'Dismissed Racketeering Case'.

No case, no conviction.

A direct citation from the article linked:

"Last October, a judge tossed out the state’s case before a trial"

If you would read the judge's writing you'd notice he got off on a technicality: statute of limitations. No-one not named Laskar disputes he took that money. And he was, exactly as I said up post, charged with theft of the $50k.

eg: http://joylaskarstory.com/wp-content/uploads/2013/05/Laskar....

I read that and my comment stands.

Whether you get off on the statute of limitations or not does not matter, what matters is that there is no conviction, so you're simply wrong but for some reason you can't seem to move past that bit.

The rest of the case was not decided on its merits so you can't make statements like the ones you made and not everybody that is charged with something is guilty of it.

You will notice the very careful wording of that document including bits such as 'alleged', 'purportedly' and 'can'.

In other words, had the case gone forward there is always a chance that there would be a conviction, but since it did not we will simply never know.

But the judge leaves ample room for a case that would have been decided in the defendants favor on other grounds than the one chosen, which is that they simply waited too long.

And now it is up to you to decide why they waited that long.

Also, you keep claiming that he stole $50k, but the judge - rightly, in my opinion - writes that that's not what he did. Let me cite the article you linked:

"The question before the Court is what constituted the alleged thefts: the taking of the chips or the taking of Georgia Tech's money? Defendant's technology was built from from microchips, not bank notes. What he purportedly stole from Georgia Tech was the microchips he (through Georgia Tech) ordered from CMP.

Those chips rightfully belonged to Georgia Tech because Georgia Tech ultimately, paid for them.

However, the University's payment for the merchandise is a collateral consequence of the Defendant's alleged theft, and a measure of the value of the goods Defendant allegedly stole. The Payment is not, however the 'theft' that allegedly occurred in this case."

In laymans terms that reads: The court decides that the theft if there was one was the chips, not the money and that the date when that happened is now so far in the past that the case is dead crucially, without deciding whether or not a theft actually took place.

Since this whole case seems to have started with jealousy and people smearing the defendant it is particularly ugly that you continue to write blatant un-truths.

It's quite strange how people are both arguing that the prosecutor is blind to justice (he was falsely accused, because he was not convicted, this is wrong!) but also not blind when counting the particulars of associated circumstances. I'm reminded of Aaron Hernandez being acquitted of murders, but convicted of the murder of a witness to cover up the deaths. At some point you have to rationalize that the law is not always correct and that goes both ways (for the innocent and the guilty). I never found the "they weren't convicted" argument much more weighty than the "they were convicted". He was probably guilty, they just couldn't get their case together.

> He was probably guilty, they just couldn't get their case together.

That's why there is such a thing as a statute of limitations. If you can't get your case together in an X amount of time that is the equivalent of not having a case.

So, given that he wasn't convicted, not guilty. You can't say that he probably was guilty and not say that about every other person that ever got acquitted, which is nonsense. So that claim simply does not hold up.

I agree with you that the law (or rather, justice) isn't correct and that this goes both ways. So if you are already of that opinion then why negate it after that by saying that he probably was guilty?

That's after all what courts are for.

> You can't say that he probably was guilty

I can and do, which is not nonsense applied to an infinite amount of theoretical past cases. That's not relevant.

Cases aren't assembled just to get a conviction on 20 specific items (http://law.justia.com/constitution/us/amendment-05/06-for-th...). US justice system is not about truth or even justice, but an amalgamation of concerns and subject to the irregularities of reality (if key witness X has a heart attack and dies, a case Y can fall apart).

I'm not subject to these concerns and limitations (which are both historical and societal, without being strictly law-related). He was probably guilty (in the moral, not legal sense if that's confusing anyone), based on what I have read and seen. That's distinctly different from saying he did something wrong or illegal or should be in jail or that it would be a public good to ignore.

> He was probably guilty (in the moral, not legal sense if that's confusing anyone), based on what I have read and seen.

Did you read or see something different than what I have read and seen?

Or did we read the same stuff but came to completely different conclusions?

Would you feel any different if the case had gone forward, had been decided on its merits and the outcome would have been a 'not guilty' verdict?

You've repeatedly broken the HN guidelines in this thread. We ban accounts that do that, so please stop doing that.

We detached this subthread from https://news.ycombinator.com/item?id=14123543 and marked it off-topic.

Are you being deliberately obtuse? Dude stole $50k then turned down a follow-on investment, giving Georgia Tech a valid cause and motive to pursue his criminal behavior.

How exactly did he steal 50k? It says georgia tech paid 50k for some chips which where sent to korea for verification, and then back to georgia tech, which the professor said is allowed by tje licensing deal. And which was not shown in any way in court to be "stealing".

He used Georgia Tech money to pay for a chip run for his private corp Sayana. The professor claims this is allowed by the licensing deal. The judge, prosecutor, Georgia Tech, his peer professors, and professor friends at other universities all believe this to be theft of Georgia Tech funds.

I'll give you this to think about: If you stole $50K from some institution do you honestly believe they would then offer you a follow on investment? And then if you turn that 'offer' down that that would give valid cause and motive to pursue for criminal behavior?

That makes absolutely no sense at all.

If you steal from me I don't need further motive to pursue so the whole 'follow on investment' thing is utterly pointless.

And I would never demand to do a follow on investment in a company that I'm alleging stole from me. That's ridiculous.

So either he stole and they should have pursued it there and then or they should have dropped the matter. But to only pursue after he turned them down makes this look like a business deal gone sour and the whole criminal thing just being tacked on as some kind of revenge.

I've had a similar thing happen to me once. A guy - who will remain nameless but he was a German businessman - bought himself in for a small amount in a company I had founded, then when he offered to buy another stake we refused. The next thing we knew we were going to be sued for all kinds of infractions, just a way to up the pressure from his position as a shareholder. This story here has way too many parallels with that story to just believe GT outright.

And in that other story I happen to know exactly what happened. So, either you're going to have to do a lot better to answer those two questions I asked at the top of this comment or you're going to have to admit that it really doesn't make any sense.

To me it simply sounds like GT wanted a larger piece of the action and when they were told to walk they came up with this theft story to up the pressure.

Are you seriously claiming people have never let $50k slide as part of a business deal, then when things have gotten acrimonious, pursed every available avenue? Because I've seen it happen (well, more like $30k, but this just used for personal stuff).

And he did steal the $50k -- notice on his website he nowhere refutes that bit. It's blah blah blah GT invested (yes), he was in an incubator (yes), but that doesn't make your GT funds for your academic work into your Sayana funds for your Sayana work. And as mentioned elsewhere, everyone involved: prosecutor, judge, GT, peers at GT, peers at other universities, ie everyone without the last name Laskar, agree he stole at minimum that $50k.

First, personal attacks are not allowed here. Second, your comments in this thread have crossed far into axe-grinding. Please stop.

We detached this subthread from https://news.ycombinator.com/item?id=14123174 and marked it off-topic.

Two suggestions on why this happened (from [1])

   Georgia Tech auditors accused Dr. Laskar of stealing as much as $1.5 million 
   to benefit Sayana. In the end, the faculty committee determined that Georgia 
   Tech had paid for $50,000 worth of chips in 2007 that were sent to a Korean 
   chip research institute to satisfy a contractual obligation that Sayana had 
   with it.
   
   Dr. Laskar argues that any chips paid for by Georgia Tech and sent to the 
   Korean institute originally served academic purposes. He added that the 
   Koreans did not keep the chips, returning them to Georgia Tech after its 
   engineers verified that they worked. Dr. Laskar said that this was a common 
   practice with other companies at the chip design center and that Sayana had 
   the rights to do it because of its licensing deal with Georgia Tech.
   
   The accusations followed an episode at Georgia Tech two years earlier. The 
   university had been caught up in a scandal that received wide publicity in 
   Georgia, in which employees were charged with making personal purchases on 
   Georgia Tech credit cards, known as procurement cards.

And note that other professors agree "Laskar 'pushed the edges' of what seemed ethical".

Second,

   With Sayana, Dr. Laskar said he didn’t take the informal path that faculty 
   start-ups at Georgia Tech are encouraged to follow. While he accepted money 
   from a start-up incubator financed by Georgia Tech, he declined later rounds 
   of funding because it would have involved giving up equity in Sayana, 
   allowing the university to install board members and professional managers 
   of their choosing. “I’m sure that torqued people,” Dr. Laskar said.

The article [1] quotes some university employee saying that this hasn't affected university spin-outs which seems laughable. If Georgia Tech was willing to pursue a rainmaker like this, well, Stanford et al will be happy to have them.

[1] http://www.nytimes.com/2013/11/17/technology/reaching-for-si...

It's funny how the first round of funding apparently more or less requires you to accept the second otherwise you're 'unethical'. That's just plainly wrong. Either you get to decide round-by-round what the best option for you and your company is or it should simply be one round.

To give a bit of seed capital, wait to see what flies (and thus is very much de-risked) and then to force an additional round requiring dilution and board members that may simply be luggage to haul around should be up to the present day shareholders. The University is playing a dirty game here.

A friend of mine was in a similar situation, first round of funding was peanuts, second round - after substantial input in time, funds and efforts of the founders - on much less good terms (and effectively still peanuts) including board members and so on.

These are known as 'pro-rata' rights, which entitle earlier stage investors to participate in later rounds in order to maintain their stake in the company. These are relatively well-established rights that you will likely find in most VC term sheets.

Pro-rata rights are, to some extent, a reward for the risk that the investors take in investing in a very early stage startup. They also ensure that early-stage investors remain invested in your company; without a pro-rata right, the absolute gain of your company exiting at $100M vs $500M is much lower for the investor with a small stake. In a similar vein, the protections protect the investor from being diluted out of any significant stake in your company.

Sure, I'm familiar with that. But there is no such thing as a demand that a later round actually takes place.

That's up to the shareholders and if they don't want to raise another round because they don't like the terms then they don't.

It's not an obligation.

Ok, yeah, demanding subsequent rounds against founders' wishes is pretty mean. I guess you usually need investor approval to raise further rounds, but this would be taking that right of refusal much farther.

Well, right or wrong, it's probably ill-advised to play fast and loose with what's university money vs your private money while turning down a follow-on investment from the university.

Why? If they don't want to run the risk of you not accepting round #2 they shouldn't give you round #1 in the first place.

Either that or write better terms.

Please stop quoting blocks of text with 3 spaces. It's broken for mobile users, or desktop users with narrow windows, and forces people to horizontal scroll.

Apologies; I thought 80 columns was ok for everything?

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