This Week in Startups Navigating Challenges in Distressed Companies with Becki DeGraw | Wilson Sonsini Startup Legal Basics
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Sep 19, 2024 Becki DeGraw, a partner at Wilson Sonsini, specializes in legal counsel for startups and distressed companies. In this conversation, she outlines the challenges distressed companies face, including navigating complex legal landscapes and the implications of pay-to-play funding scenarios. Becki emphasizes the need for thorough market checks and transparent governance to protect stakeholders. The discussion also dives into ethical responsibilities within corporate governance and the risks associated with operating in the turbulent cryptocurrency sector.
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VCs Abandoning Ship
- VCs often leave struggling companies' boards, viewing further involvement as a liability.
- This can put additional pressure on remaining directors and officers.
Avoid Pay-to-Play
- In distressed situations, consider a sale or shutdown rather than pay-to-play rounds.
- Pay-to-play rounds rarely lead to positive outcomes.
Conduct Market Checks
- Conduct thorough market checks before accepting insider funding, even in down rounds.
- Document all investor interactions to demonstrate a financing of last resort.