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Comment Re:Good luck with IP if working with the Chinese (Score 5, Informative) 262

This generally isn't true. A VC will get preferred stock and as such in a liquidation event they will be able to recover their money before anyone else can. (So if you take on 1M in funding, sell the company for 500K, you're right, you get nothing and they lose 500K). I'm guessing this is what you're thinking of.

If you sell the company for 2M and they put in 1M, they get their 1M back and the rest of the pie can be sliced up in different ways depending on the term sheet. (Google participating preferred stock cap)

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