Ofo's fall shows why startups need to retain control

Early-stage companies are learning from Ofo’s failure and adding more terms and conditions to their fundraising contracts in order to prevent losing management control.

The rise and fall of bike-sharing businesses make a dramatic show, but start-up founders view it as a warning for their own business and are starting to change some of their fundraising terms.

Bike-sharing company Ofo gave us a perfect example of how things can go wrong when investors do not agree with the management team.

The Chinese start-up, best-known for its dockless yellow bikes, ran into serious cash flow problems and is on the verge of bankruptcy, founder Dai Wei said late last year.

In light of Ofo's problems, many start-ups are redefining the rights that investors enjoy for preferred stock and veto...

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