Protecting 27% of shares for a SaaS founder from Gliwice
During a tough investment round, a fund tried to force unfavorable dilution clauses. We rebuilt the share structure, maintaining the founder's control over strategy.
CloudNode from Gliwice hit a wall during the second round of financing. A VC fund tried to force clauses that would strip the founder of real influence over key decisions in the company. We stepped in to tighten the share structure and save control over the company strategy.
The challenge
In March 2024, the founder of CloudNode, Marek Szewczyk, received a term sheet for 4.2 million PLN. Although the sum looked attractive, the documents contained hidden anti-dilution clauses that in practice marginalized him in future issuances. Marek manages a team of 9 people and could not afford decision-making paralysis.
The atmosphere was tense, and negotiations with the fund were stuck in a stalemate for nearly 6 weeks. There was a risk that the fund would withdraw completely, leaving the company without funds to develop server infrastructure. The founder's shares were to be diluted to 31%, which, given the investor's specific veto rights, gave the fund full power over the IT budget.
Our approach
Our team started with a thorough audit of the current company agreement and the investor's proposal. Within 11 business days, we prepared an alternative model for the distribution of votes at the general meeting of shareholders. We focused on hard facts and business diplomacy instead of aggressive legal fighting.
We organized three negotiation sessions in Katowice, shifting the dispute from theoretical definitions to operational practice. We showed the fund that blocking Marek's freedom would slow down the implementation of new functionalities by at least 4 months. We used the tight share structure method, separating capital interests from product management rights.
The solution
We rebuilt the share structure so that the investor received their capital return guarantees but without the right to block the current SaaS development strategy. Marek retained 27% of the shares that were originally meant to go to the fund as a so-called risk security.
Additionally, we introduced clear clauses on intellectual property (IP) protection that precisely define the authors' contribution of the developers. The entire process was formalized at a notary in Gliwice in mid-May 2024. Exactly 64 days passed from the first meeting to the signature under the new agreement.
Results
Marek Szewczyk maintained full operational control over the company, and the fund transferred the funds within 5 days of signing the documents. The company avoided chaos in the board and retained key IP assets.
Timeline
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March 2024Term sheet audit and detection of hidden anti-dilution clauses.
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April 2024Three rounds of negotiations in Katowice with the VC fund's management.
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May 2024Preparation of a tight share structure and signing of the notarial deed.
"The game for control over your own project can be brutal. The Alians team showed the investor that money likes silence, and hard facts convinced them to make concessions. They saved my decision-making power."