I have heard anecdotal stories of very bad post-investment behavior from non-traditional investors. My impression is that mainstream tech investors assume they will all see each other again. There are some challenges with this, but is solves the prisoner's dilemma. They won't overtly screw their investees, or word will get out. This isn't the case with some of the other sharks throwing money around. I have heard horror stories of shakedowns based on obscure clauses inserted into term sheets by PE investors. I have heard stories of these investors abusing the founders as they take full control of the companies, because it is in their legal right.
If the endgame is great company, or a high long term valuation, going with the wrong short term financing just to get a higher sounding valuation is foolish.
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I have heard anecdotal stories of very bad post-investment behavior from non-traditional investors. My impression is that mainstream tech investors assume they will all see each other again. There are some challenges with this, but is solves the prisoner's dilemma. They won't overtly screw their investees, or word will get out. This isn't the case with some of the other sharks throwing money around. I have heard horror stories of shakedowns based on obscure clauses inserted into term sheets by PE investors. I have heard stories of these investors abusing the founders as they take full control of the companies, because it is in their legal right.
If the endgame is great company, or a high long term valuation, going with the wrong short term financing just to get a higher sounding valuation is foolish.