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Running a business takes a lot of work, and for many, the hardest part is raising the funds that are needed to succeed.

What would you do if the venture capital company you were working with started lying and doing shady things to try to get more money?

That is what happened to the business owner in this story, so he slipped in a clause to the contract that put them in their place.

Check it out.

Don’t want to sign off on terms you agreed to? No problem, go ahead!

So quick context: some friends and I started a small tech company that tries to help people with data privacy and prevent their exposure in data leaks.

Let me be the first to say that I think the tech industry as a whole doesn’t deserve much credit.

There’s a lot in the world today that’s worse than it was 30 years ago because of how big tech has invaded our lives.

This isn’t a glorification of the industry or of startups or the venture-capital fundraising world of it all.

I’m in the middle of it and I hate it, and we’re just a modest company that’s trying to stop bigger tech giants like Google and Facebook from making crazy cash on our private data.

So anyway, maybe it goes without saying that some of my least favorite work has been dealing with big venture capital firms who couldn’t care less about the lives of the people on my team.

Sounds like a great company.

I’m just trying to get us to a reasonable position where I can offer desirable employment to our staff and genuine value to the people who’s data we’re trying to help protect.

Anyway, as a company, we’re doing okay today, but this story took place a couple years ago as we were starting to get on our feet.

I won’t bore you with the details of how small tech companies get started financially, but back when we were just 3 people, we’d gotten some initial investment from folks we liked, who cared about our goals, and who supported our decisions.

We grew a bit and had some success, and were looking for what would hopefully be a final fundraise, after which we’d be self-reliant on our own revenue to keep the lights on and grow as we needed.

Here’s where the trouble-makers come in.

This new fundraise round went well and we ended up having a successful close with a VC firm–let’s call them X-Ventures.

We didn’t need much from them, we had decent revenue already.

And more importantly, everyone agreed to a clear plan from the beginning: they would provide a small amount of capital, and then in about half a year’s time, we’d do one last small fundraise “round extension”, and hopefully that would be it.

Always put everything in writing.

A minor detail at the time but important to the story: although we never wrote it into the contract, we agreed that when we did the “round extension”, we wouldn’t re-audit our company’s valuation.

Which is to say, we’d let these possible new investors come in based on the valuation we’d just completed of the company’s worth.

At first, X-Ventures played along and things were fine.

But as the extension round approached, they started acting differently.

Chiefly, they pushed for a new valuation, despite earlier agreements that there wouldn’t be one for the single and annoying reason that a new, higher valuation would pad their own returns and their own pockets.

The problem?

Not only would that move likely scare off new investors, but it would force us as a company into a harsher, steeper revenue roadmap just to justify our valuation numbers moving forward.

This new valuation didn’t serve anyone, not the company, not my employees, nobody, all that it served was the greed of the X-Ventures investors.

Tensions grew, and X-Ventures’ board members started dragging their feet.

They skipped meetings, dodged calls, and refused to sign off on any paperwork that advanced the deal.

They picked fights about uncontroversial decisions and played devil’s advocate around the silliest details.

Their goal, though, was clear: to stall and maybe kill the entire process.

I saw what was happening.

Although I have to say, for the egos these venture capital folks walk around with, it’s wild to see some of them act more like children than any colleague or employee I’ve ever worked with.

Now that is just wrong.

What’s more, once as I was walking out of the office, I overheard one of these problem investors on the phone with another one, saying “I know we don’t have many good arguments here, but if they don’t get our signatures on these critical terms, they can’t proceed without us. We still have control here.”

I can’t tell you how much this upset me.

We’re a small company, looking to run on slim but genuine margins, and they’re trying to play with the livelihoods of every employee here, just so they can edge out a larger portion of the pie than they were already guaranteed.

Anyway, I hatched a plan.

It wasn’t as if they were throwing a fit about *every* signature, just the ones critical to the progress of closing the round.

So, with the support (and even enthusiasm) of the company’s lawyers, I quietly inserted a clause into an otherwise-insignificant fundraise document that was set to be signed by all parties.

The clause stated that if any board member was required to sign future documents and failed to either (a) actually sign, or (b) express their rejection of the agreement terms by the signature deadline, then I would have a kind of “power of attorney” authority to sign on their behalf.

The VC should have known to read every line.

The clause was subtle, buried in boilerplate, and—given X-Ventures’ recent “strategy” of being less involved than they ought to be—the document was signed by everyone without complaint.

(I should note that many good folks on the board, who care about the company and pay attention to its details, noticed this clause and reached out to me about it.

I didn’t try to hide my intentions from them at all, and when I told them why it was in there, they were delighted by it).

Sure enough, when the final terms of the extension were sent out, terms that were fair to all parties and terms that nobody, X-Ventures in particular, could raise any valid objection to, they had a last-minute tantrum and figured they could kill the deal by just, once again, not signing the documents that had been sent to them.

They ignored emails, missed meetings, let deadlines slip, and at the absolute last moment of the last day when the document could be signed, one of these folks called me with a smug, “Looks like we missed the deadline. Guess we’ll have to renegotiate.”

Except, no.

I bet that was quite a surprise to them.

Because, per the agreement they had already signed, I had full authority to sign for them.

And I did.

The deal was closed.

We got funded.

And X-Ventures, despite their tantrums, had played themselves.

I guess they should have read what they were signing.

Read on to see what the people in the comments have to say about this.

I would have loved to be there too.

This commenter appreciates the story.

Yes, always get everything in writing.

This does seem unlikely.

Stand up to corporate greed.

Way to catch them off guard.

You snooze you lose!

If you liked that story, check out this post about an oblivious CEO who tells a web developer to “act his wage”… and it results in 30% of the workforce being laid off.