Venture capital investors are not like the rest of us. When regular folks buy a share of stock and the stock subsequently trades for a lower price, they take their losses. All of them. When a venture capitalist buys a share of stock, and the company subsequently sells shares at a lower price, the venture capitalist doesn’t usually feel the full loss. Sometimes, the VC doesn’t take any loss at all. Welcome to the world of “price protection.”
To read the original article: “Price Protection” in Venture Capital Financings: What Entrepreneurs Should Know | The National Law Review
