[Domenic_S]

Thanks for writing this up.

> They agree to pay for flights so long as we pay for our own hotels and car rental.

This seems crazy to me. In my head, if a few hundred bucks for flights & lodging is too much to ask, how much dough could they really have to invest? Is this standard?

> It's a convertible note with pretty standard terms, fully signed by all the partners. We sign and send it back. [...] He explains that they can't do the deal. A check isn't coming. He can't explain why.

Is there any legal recourse available in this situation?

> My mind races and I think: it couldn't have been that mentor, could it?

Which mentor are you talking about here?

> Now I have to try to reorder my life. My job is gone. My apartment is already rented out to someone else.

You know, I've seen deals fall apart so often that until cash is in the bank I don't change my life. Maybe it's from my time as a car salesman in college - until the bank funds the loan, I wasn't counting my commission. Deals fall apart in all sorts of crazy and ridiculous ways.

[beachstartup]

> until cash is in the bank I don't change my life.

if you're in sales, this is EXTREMELY important, doubly so if you sell for a startup. the deal isn't real until the money shows up.

customers will take advantage of your kindness, lie to you, manipulate you, appeal to your vanity, and they can smell desperation from a mile away. "give an inch and they'll take a mile" - these folksy old timey sayings don't come from nowhere.

there are all sorts of shitty people out there that will play napoleon for a day just because they feel they have power over you. it's sickening.

do not start work until you get the money. do not ship product until you get the money. do not pay your suppliers until you get the money. do not pay your sales people commission until you get the money - money didn't show up? well that wasn't a sale, now was it?

if they don't want to pay at LEAST a deposit, they're not serious. END OF STORY.

very simple in concept - very difficult in practice because there are some people who are just plain naive out there. one of the most important skills you learn as a startup is how to say no.

[jtheory]

This is an important lesson, but it's not an absolute rule.

You need to have a sense for your customers, how much power they have over the money, and how much they'll suffer if you're inflexible.

I've spent years working with teachers, who (as patio11 will tell you) are not a great target market for ready cash, but who are very honest. I used to have an informal policy where a teacher would just tell me they were working on getting a purchase order, and I'd credit their subscription. I changed that to only crediting them a month at a time (after one situation where I realized towards the end of the year that one PO had never arrived.. it was stressful for the teacher, but all resolved amicably), but still, there's trust involved.

If I didn't trust them, a lot of these teachers would just be stuck without access for weeks -- the site would be far less useful to them.

- Edit: "until the cash is in the bank, don't change your life" still applies in my situation; payment was slow and unreliable (though paid in the long run), and that does affect planning.

[hga]

In your case you have an established business, and you have a class of customers you understand and therefore who you can extend tailored win-win credit policies to. As you note in your edit, that's a different thing than the stuff that changes your life, like all that went in to establishing your companies up front.

[accelanon]

The convertible note was for $40,000, so they definitely had the money to spend if they were fully serious. I think they just played hardball.

There's no real legal recourse. I asked my lawyer the instant it happened. And even if there were, what's the best outcome you could get? Work at the accelerator with investors who hate you?

The mentor was the co-founder of the startup who "acquihired" me from my first startup.

And totally agreed on your last point. For me, it was definitely a lesson learned. The even better lesson was that I was spending a lot of time hustling for the wrong things. Why should I be working so hard just to get $40k? What would an accelerator do for me that I couldn't do for myself? Now I'm bootstrapping while consulting, a much more sensible choice for most businesses.

[accelanon]

The other thing to keep in mind is that the accelerators work something like this:

1) Fund a bunch of companies with the expectation that maybe 1 in 10 will succeed.

2) When the other 9 fail, you have a bunch of talented developers all in one place. And guess what? The really successful company is hiring.

It's pretty brilliant, if not Machiavellian.

[redact207]

A bunch of talented developers who all want to run their own show. I'm not sure they'd make great employees for a small slice of equity even after their startup's failed.