I was asked to answer this exact question on Quora and I did so some time ago.
The beauty of evergreen content is that it resurfaces all the time and it is as relevant today as it was years ago when I answered it. One of my favourite ways to resurface content is when I see people on Twitter put out a Tweet linking to an old post. Tech Tidbits did this with this Quora answer and also linked to a Pinterest board with my quote, which I love.
I’m just writing verbatim what I wrote in a Quora response years ago.
So, what can you do?
Legal actions: zero as a term sheet is not a legally binding document.
Retribution actions: lots.
But why bother? There are bad people in life, yes. But the negative cycles you’ll spend on trying to bad-mouth somebody aren’t worth the effort. At worst you potentially have others question your intentions and most people don’t like people who bad mouth others.
They often — perhaps wrongly — assume that while the VC was probably ill-intentioned there was also probably something wrong with you or your business. You know that’s not true but trust me others will have doubts.
My Recommendation
Get even by getting funding, building a great company and always know that the best “fuck-you” in life is success.
Of course you should eventually warn other entrepreneurs you know one-one in private. I recommend waiting for a cooling off period. As they say, “Revenge is a dish best served cold” because if it’s recent it comes across as more petty.
Finally, know that the VC & entrepreneurial worlds are very, very small. We all trade in information all day. I have spoken with many VCs in the past about which VCs pull out of deals. The market has a way of self-regulating bad behaviour.
So if you’re a VC — you better have a pretty damn good reason for pulling out of a deal after offering a term sheet. There are times where it is warranted. But they are few and far between. Your word is your bond and pulling out screws founders with other potential investors.
[This post by Mark Suster originally appeared here and has been reproduced with permission.]
