Legal Question in Business Law in New York

Is it common in a small business contract for angel investors to risk loosing their full investment if the company fails?


Asked on 10/11/12, 8:41 am

2 Answers from Attorneys

Walter LeVine Walter D. LeVine, Esq.

Not having seen the contract language, this is usual, as there are usually no guarantees. This might be limited if there are contingencies that allow angels to be notified if certain criteria have not been met and they can withdraw any remaining funds.

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Answered on 10/11/12, 9:02 am
Roman Fichman Esq. Law Practice of Roman Fichman Esq.

Notwithstanding my colleague's answer, though the risk of loss exists, nonetheless the angel investor can seek a personal "good guy" guarantee from the principals, secure the assets of the business to the investment contingencies, seek a conversion of the investment into equity as well some other methods.

Feel free to contact me to if you need to review this agreement. My practice is focused on startups and investors.

Roman R. Fichman, Esq.

www.TheLegalist.com │ @TheLegalist

email: Info (@) TheLegalist (dot) com

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Answered on 10/11/12, 9:26 am


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