How much "management control" can you give an investor who wants to invest in your startup? What limits can co-founders put in place to prevent interferences?
Here’s my zen learning and answer:
All that you can really control, and that matters, are board seats. And not “selling” the majority of them.
Yes, there are legal “protective provisions” that sort of matter and a great corporate attorney can help you here. But much of these protections are already in California or Delaware law and don’t amount to much in the real world.
What I suggest and push for is a board proportionate to ownership.
And many VCs push way too far here.
If your VCs own 20% of the company, they should have 1 seat. You should have 4.
Not 2+2+”1 outsider” that they basically appoint. A so-called “balanced” board.
Keep control as long as you can. If you are super hot, that’s forever. At least, try to keep it until you’ve sold > 50% of the company 🙂