Winding down process if the company is to fail

A founder from one of my portfolio companies recently asked how I would prefer them to handle the winding down process if their company were to fail.

Here are some things to consider:

– Keep your investors constantly updated over email, a few times a week isn’t too much.

– Don’t hesitate to ask for help. Investors have seen many companies going through wind-downs and can offer advice on how to navigate the process effectively.

– If any capital remains, return it to the investors. While it’s often not feasible, even a partial return, like 10% of invested capital, demonstrates good faith and shows that the founder was committed to being a responsible steward of investor capital until the very end.

– Even during the winding down process, there may still be opportunities to sell assets or pursue an acquihire deal. If these options are viable, don’t lose hope—keep pushing forward.