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The Wrong of First Refusal

Vanessa the velociraptor and I recently (well maybe not so recently) went to talk about early-stage companies.

Much of the was untargeted and overly general to the point of being dangerous. Had we been a mature massive marine mammal company it might have applied, but most of the audience was filled with regal reptiles.

It was only terribly disappointing until the speaker said that it was OK to lightly give “rights of first refusal” because it wouldn’t affect the price.

We felt like screaming (and velociraptors can be very loud) and left.

As a buyer or , would I put in the time and effort for and pricing knowing someone else could just walk in and take the deal after I have done all that work?

As a small company, I can’t agree to a lockup period for due diligence or sell an option for that peroid.

It is likely to to make the otherwise valuable company worthless.

If only that talk had just been worthless rather dangerous.

Written by Russell Brand

Entrepreneur in residence at Founder Institute, he has mentored, performed due diligence on and invested in numerous early stage companies. Hundreds of these early stage companies have described Russell’s insights and advice as the most useful thing in the history of their companies. He has always had an inborn ability to find more valuable uses of new ideas and faster ways to achieve results.

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