[danielpal]

I'll go the opposite of most of the comments here.

Assuming a NO attitude right from the start is probably not the way to go. Telling them to "Pound Sand" or just plain NO is not in your best interest. First, you should let the B investors know about this - ASAP. Second, you should start by emailing the GP at firm A and asking him to clarify why they think "you should pay" their legal fees.

With this information, you should consult your legal counsel on how is best to proceed. Most likely the A VC firm feels like you didn't negotiate in good faith and you made them spend money with no intention to accept their offer. You should in this case talk to the GP at that firm and show him that you wanted to close a deal with them and you even made them aware of another offer and asked them to reconsider the terms.

Most of this issues are easily solved if you discuss things with the other party. Assuming a NO attitude from the start, just brings everyones worst character and might land you in a legal dispute.

[codingdave]

Meeting with a firm who is actively out to collect money from you is a dangerous path for a young founder without a legal background. You don't want to accidentally give them any more fuel for a potential lawsuit via something you say during that meeting.

I do agree that talking to legal counsel is wise... but not necessarily VC B's legal counsel, as that relationship will skew towards what is good for the VC, not your company.

Also, don't be afraid of getting sued. One of my lawyer friends always says that small businesses tend to harm themselves by over-avoiding lawsuits. If you grow enough, lawsuits will happen, and you need to know how to deal with them. Act from a position of knowledge, not of fear.

[mikeryan]

This is one of those things where you have his lawyer talk to your lawyer. This guy shouldn't be talking to anyone himself.

[paulsutter]

Absolutely no.

The best thing he can do is listen and get more information. You can't resolve a dispute without talking, and it only ends up in court if you don't resolve it. Yes he could ask his new investors for advice, and yes he should have called his lawyer the minute he heard, but the best way to clear things up is to listen to the VCs who are unhappy.

This is a completely different situation from the reason not to "talk it over" with the cops.

[codingdave]

But this is not a dispute, at least not yet. It is just a one-sided request. They can just talk to their lawyer, ignore it, and wait to see if the VC files a suit. Short of that, there is no obligation to even reply. So why go into potentially dangerous legal territory at all, when you are perfectly in your rights to just discuss it with your lawyers, but then ignore it?

[paulsutter]

This is a VC who wanted to invest in the last round, not an attacking army. There's no reason to leave the relationship on a sour note.

[zamalek]

This doesn't make things necessarily more sour. Firstly, given the evidence in the post, it sounds like a BS claim (although only a lawyer would know). Things are already sour. That being said, reaching an amicable arrangement via legal proxy doesn't make the situation sour at all. Getting lawyers involved is not an aggressive action - they are the subject matter experts. Just like you wouldn't have a software architect dealing with relations, you don't put a founder in charge of legalities.

[zekevermillion]

This is all terrible legal advice. If you think there may be a legal dispute, you should absolutely not communicate with the other party. You should involve your own lawyer, and decide whether and how to communicate after considering the ramifications.

[zamalek]

> you should absolutely not communicate with the other party at all

One very slight, but important, addition - don't even indicate that you are looking for your own legal advice. Mum's the word. Totally a slippery slope albeit plausible argument: "Investor A" might just be waiting for you to make a legal mistake. Even that post could work against you (deleting it could be worse). Keep your lips sealed and share the whole ordeal once you have reached postmortem, if you still want to go that route and your lawyer gives you the go-ahead.

[beachstartup]

as someone who has been in a similar situation

do not respond. don't even acknowledge receipt. call your lawyer, and call your existing VC. tell them to call their lawyer too.

end of story.

[payne92]

+1 this answer.

You'll most likely end up in the same spot as other suggestions: NOT paying the bill. But the WAY you approach things (very good advice here) makes all the difference.