Is the entrepreneur liable in the event that a business funded by equity funding fails?

[Min George]

A business can decide to source for investors for the business through equity funding. Sometimes, a business that investors put money in to share ownership of the business fails.

Is the entrepreneur liable to the investors if such an event happens in an equity funded business?

 

[Augusta]

I think it is always about the agreement of the contract. They do consider failure too and know the percentage refund the entrepreneur is likely to bring if the business fails

 

[King Belieal]

Equity funding requires that the entrepreneur states his terms clearly on losses and doesn't allow the investors to overshadow him.

 

[Suba]

If the funding is in the form of equity, it is treated the same as shares, where if there is a loss/profit it will be shared, even if it goes bankrupt then they have to bear it, unlike bonds. As long as the entrepreneur runs the company honestly and transparently, he is not responsible or has to replace the equity funding.

 

[Laurentta]

If the business funded by equity funding fails, i believe both the entrepreneur and investors are liable.

 

[Springtime]

If the business is a limited company, investors buy shares of the company. When the business fails, the shareholders just lose the money invested in the shares. The entrepreneur does not need to pay the shareholders.

 

[Niyi Br]

The entrepreneur has to proof that there were no shady activities that caused the business to fail. Every business is expected to fail. Doing so, he has no liability.

 

[Kera]

If the entrepreneur didn't make commitment to be liable. He won't be liable for the failure of the business funded by equity investment.

 

[Fidelia]

Nothing makes the entrepreneur liable if he partners with a angel investor to run a business. The two of them are Co owners of the business.

 

[Kross]

The entrepreneur is not liable. The investor is a co owner. That means the investor is also liable if it fails.