If a VC Replaces a Startup's Founder, Here's What to Expect

By George Khoury, Esq. on February 16, 2018 | Last updated on March 21, 2019

Working for a startup can come with a lot of perks including flexibility and a fun environment. But when a VC invests to the point where it can push out your startup's founder, you might want to consider reviewing the situation.

While the research shows that companies that are doing well to begin with go on to be even more successful when a founder is replaced with someone who actually has business acumen, a founder getting axed from their own company is a rather ominous sign of things to come for that relaxed environment. If the startup you work for is doing well and your founder gets replaced, you can probably say goodbye to the weekly in office masseuse and other ridiculous perks that attracted you there in the first place as logic might just be taking over in an effort maximize profits and the company's valuation.

Founders Shouldn't Run Big Companies

Simply put, when a startup gets off the ground and is no longer just a handful of employees, the management responsibility and duties can quickly escalate beyond what a company's founder may be equipped to handle. When an inexperienced founder gets replaced, the role of an in-house attorney or general counsel, like other team members in a variety of roles throughout a company, could quickly change, for better or worse (or both), depending on the size of the company and how ready the attorney (or employee) is for the change.

A general counsel or in house could find themselves becoming much more in demand, or conversely, could see their work get outsourced, or even have their position eliminated if it is deemed unnecessary. There could also be no change whatsoever, particularly for those in house who serve rather specific functions, like compliance attorneys.

Working Smarter

Given that the data continues to generally reflect that companies doing well will do even better when inexperienced founders are replaced, unless you took the job solely for the laid back culture and over the top perks, a motivated attorney can use a change in the management to potential step into more responsibility.

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