> as I don't know if pulling venture capital is as easy as selling the stock.
There's generally minimal liquidity. During a round, an existing investor may have the opportunity to sell some shares to new/other investors, but if she knows something that's not coming out during diligence, there's definitely something fishy going on. If the round is shaping up to be a major up-round, maybe an early investor wants to lock in a good return, but that's beside the point here. And then of course if things really aren't going well for the company, you're looking at the bad kind of liquidity event--a liquidation.
So if a VC wants to pull out based on a negative hunch, it's probably either impossible or the signal itself will doom the company if it wasn't already doomed.
There's generally minimal liquidity. During a round, an existing investor may have the opportunity to sell some shares to new/other investors, but if she knows something that's not coming out during diligence, there's definitely something fishy going on. If the round is shaping up to be a major up-round, maybe an early investor wants to lock in a good return, but that's beside the point here. And then of course if things really aren't going well for the company, you're looking at the bad kind of liquidity event--a liquidation.
So if a VC wants to pull out based on a negative hunch, it's probably either impossible or the signal itself will doom the company if it wasn't already doomed.
Just my 2 cents as a first-time founder.