Why we walked away from a startup we genuinely believed in.
There was a startup I really wanted to back.
The idea was sharp. The team had momentum. On paper, it had all the signs of something we’d normally jump into.
But we didn’t.
We said no.
Not because we didn’t believe in the potential.
Not because we saw a fatal flaw in the product or team.
We passed because of the way the deal was structured — or more accurately, not structured.
It felt like a one-way ask
When we got to the investment terms, the conversation narrowed.
Suddenly it wasn’t about what we could build together.
It was just: “We need your capital.”
There was no clear breakdown of how the money would be used.
No detail on investor rights or visibility.
No explanation of what we might receive in return.
And financially? There was nothing on future dividends, profit-sharing, or even preferred terms. Just equity, with a hopeful future exit baked in.
It felt like a handshake with one hand missing.
My business partner voiced what I was thinking
After reading through the draft agreement, he said, “This doesn’t offer much to the investor, does it?”
That was the heart of it.
Early-stage capital is more than a cheque. It’s belief, time, and risk. It deserves more than vague promises and “we’ll figure it out later.”
Money should feel like a partnership, not a donation
Investors don’t expect instant returns. That’s not how this works.
But what we do expect is intentionality. And, that is a fair financial structure and a plan for what happens next.
For us, that includes:
- A clear use of funds
- Basic investor protections or updates
- Some form of financial visibility
- A possible path to return, even without an exit
We weren’t asking for control. We were asking for clarity.
And when it wasn’t there, we knew what that meant for the relationship going forward.
It’s not about giving up too much. It’s about giving something real
Founders are often told not to dilute too early. And they shouldn’t.
But too many skip over a more important question:
What are you offering in return?
Equity on its own is not a value exchange.
Equity plus trust, visibility, and a sense of shared direction; that’s a deal.
If you’re asking someone to invest in you, don’t just hand them a term sheet. Show them you’ve thought through the entire relationship.
We didn’t invest. And I don’t regret the call.
I still think the team will build something.
But I also think they missed a step. A critical one.
Early capital doesn’t just keep you afloat. It sets the tone for how you work with people, and how you treat those who back you before it’s cool.
And if the structure doesn’t reflect that? It’s worth rethinking before someone says no.
Need help navigating the messy middle?
I work with early-stage founders to pressure-test ideas, sharpen plans, and stay grounded while building.
If your startup’s still becoming—Get in touch.