Foley & Lardner LLP Partner Louis Lehot was quoted in the Wall Street Journal article, “Investors Take Sink-or-Swim Approach to Struggling Crypto Startups.” The article looks at troubled cryptocurrency startups and the reluctance of investors to provide them with emergency funds.
Lehot said investors are demanding friendlier terms on crypto-startup funding deals to gird themselves against added risk. These can be in the form of side letters with added investor rights and protections, such as co-sale rights, which entitle holders of minority stakes to cash out if a majority shareholder abandons the startup. Armed with these and other safeguards, Lehot said, many high-profile investors with dedicated crypto funds are circling for possible Series A investments in the coming weeks, “presumably to take advantage of investor-favorable valuations in the current environment.”
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