Q. While we were pitching a new feature to a big client, he asked us if he could invest in our startup. He’s one of the key decision-makers in his company and has power over this implementation. I told him we are not raising now, and we should discuss at a later date, but I’m conflicted about what to do. If we let him invest, he’ll be more incentivized to adopt our solution and make us successful, but I also see a potential conflict of interest.
—Founder of a software platform
Dear Founder,
This is a great sign you are onto something right. Having a customer that likes you enough to invest is a great vote of confidence, but I see some potential red flags.
It raises an ethical issue for the customer to be asking to invest because it puts him in a position in which he can personally gain by leveraging the power of his office. In order to keep this clean, he would have to recuse himself from the decision-making process—meaning he’d have no input or influence on whether or not…
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Source : fastcompany.com
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