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Comment by CaliforniaKarl | Hacker News Reader

So, I work in the Valley, and I read & participate here, but I'm not working at a startup, and most of it is unknown to me.

With that note, I have a question!

>Most significantly and to our unpleasant surprise, our investors recently backed out of our funding round.

I don't understand something about this.

I mean, yes, it is very un-specific, but I am wondering, when is the 'point of no return' for something like this? Is it possible for a VC firm to go through all the motions, and say all the right things, and then back out 10 seconds before wiring payment for whatever reason they want?

Of course, I don't know if that happened here. It just seems to me like stories regularly appear of a VC backing out at the last minute.

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Point of no return is when the VCs wire money to you.

These people tend to exaggerate their funding prospective, saying things like "they backed out". Ultimately VCs don't owe anybody money and startups are not entitled with funding.

Investing is just like any other purchase, and as a VC if you believe that a company is not worthwhile to invest then you should be ready to say no no matter what stage the conversation is in.

Ironically the fact that the company couldn't raise another round / continue without finding is a sign that VCs did make a right choice.

> Point of no return is when the VCs wire money to you.

I'd be surprised if there wasn't some sort of cool off period in the contracts.

If that was the case, VCs would wait until they would have wired the money to you before they signed the contracts.

VCs are notorious for blowing smoke up your ass and then pulling funding at the very last second. Things like that happen all the time, it's not actually a surprise.

So from what I have read they have only received one round of funding, that was their seed, of 150k, that was from the CEO/Founder Cival Van Der Lubbe. So I think he backed out when he realized he couldn't do what several companies have already done.

Yes, as long as money haven't changed hands you can pull out usually at any time.

Furthermore funding is often not a one time payment but is paid in installments with preset milestones which means that the investor can still pull out at any time.

For the most part the investors hold all the cards, sure you can potentially draft a contract that would lock investors but no one would commit to those terms.

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