We Blocked Our Investor: A Cautionary Tale

Amar Kumar Thakur
5 min read · September 2026

When we received our first investment offer in April 2026 through a college startup program, we thought we had made it. ₹30 lakhs for 10% equity dilution felt legitimate, professional, and achievable. We stayed in touch through LinkedIn, emails, and WhatsApp, genuinely excited about the partnership.

Then came the meeting that changed everything.

The First Red Flag

Our investor completely rewrote the deal. The new terms were so unrealistic that we could not believe he was serious:

20% equity upfront
No vesting schedule
No milestones
No capital injection
In exchange, he would somehow get us to ₹1 crore MRR in a year

We were young founders, and our first instinct was to keep him around. After all, he was our first investor.

Our counter-offer was reasonable: milestone-based equity allocation.

If he could genuinely deliver ₹1 crore MRR, he deserved significant equity. That was fair.

But he refused to negotiate.

When we dug into his background, we became increasingly concerned about his track record and the amount of equity he appeared to hold across companies without a clearly visible operating contribution.

It became clear to us that this was not the kind of investor relationship we wanted for FREMN.

We cut ties.

The Advisor Trap

A few weeks later, another person entered the picture.

He positioned himself as an advisor, attending weekly meetings and requesting progress reports. Impressed by his engagement, we offered him advisor equity.

He had other ideas.

He wanted 10% co-founder equity for just ₹75,000.

This was no longer the kind of advisory relationship we had in mind. We felt the proposal took advantage of our inexperience and blurred the distinction between advisor equity and founder equity.

We said no and stood our ground.

We cut him off too.

The Incubator Scheme

The next month took a darker turn.

Two of our four co-founders received a call. The advisor was starting an incubator and wanted us as their first cohort.

We were curious, so we agreed to explore it.

The stated purpose was to help us build traction and connect with investors.

But as we would soon discover, the situation was very different from what we initially understood.

The advisor and investor had partnered to launch this incubator.

There were no investors waiting for us.

It was then that the entire situation started making much more sense.

First Meeting: Remove Two Co-Founders

We attended the first meeting expecting guidance on traction and capital.

Instead, the agenda was to pressure us into removing two of our four co-founders.

The meeting was designed to isolate us and make us question our own team.

Second Meeting: The Buddha Moment

The second meeting was pure theater.

They spent the entire time telling us we were not good enough and that only they possessed the wisdom to guide us forward.

They positioned themselves as the Buddha, enlightened and all-knowing, and us as lost, unworthy disciples who could only be saved through their guidance.

At this point, the situation was becoming increasingly difficult to take seriously.

Third Meeting: Remove Me

Then came a meeting where they called only one co-founder, deliberately excluding me.

In that meeting, they introduced two investors and explicitly asked my co-founder to remove me from the company.

At that point, we had seen enough.

The pattern appeared clear to us: eliminate the co-founders one by one, gain influence over the company, and eventually leave only one founder in a position where even they could potentially be removed through the board and control structure.

We were not going to let that happen.

Our Counter-Move

Rather than engage further, we played along.

We pretended to implement their suggestions while actually changing nothing.

We bought time, gathered information, and waited for the situation to reveal itself completely.

We did not remove our co-founders.

We did not give away equity.

And we did not give them control over FREMN.

In the end, we blocked them — both the investor and the advisor.

We cut off communication and walked away from any deal involving either of them.

The Lesson

This experience cost us months of wasted time, energy, and emotional bandwidth.

It distracted us from building.

It sowed doubt within our team.

It tested our resilience.

But it also taught us something invaluable:

Not all capital is good capital.

If you are a founder reading this, I want to tell you something clearly.

A bad investor or advisor can cause far more damage than simply losing a fundraising opportunity.

A loan has fixed terms, predictable interest, and a defined repayment structure.

Equity is different.

You are giving someone a permanent claim on the upside of the company.

And if the wrong person gets that equity, the consequences can extend far beyond dilution.

They can affect your company, your team, your decision-making, and your vision.

Do Your Due Diligence

If you are raising your first round, do not just evaluate how much money someone is offering.

Evaluate the person.

Check their track record.

Look at the companies they have worked with.

Talk to founders they have invested in or advised.

Understand what they actually contributed.

And most importantly, understand exactly what you are giving away.

If someone wants equity for helping you reach a target, ask for milestones.

If someone wants equity for working with the company, ask for vesting.

If someone promises investor introductions, ask what happens if those introductions never materialize.

Do not give away permanent ownership for temporary promises.

What We Would Do Differently

We were inexperienced.

This was one of our first serious encounters with investors and advisors.

That made us more willing to give people the benefit of the doubt.

Now we know better.

We would ask harder questions earlier.

We would conduct deeper diligence before entering long-term conversations.

And we would never allow excitement around fundraising to override basic governance.

Your cap table is not a thank-you note.

Your equity is not free.

And access to investors is not the same thing as investment.

The Takeaway

The original offer was:

₹30 lakh → 10%

The next offer became:

₹0 → 20%

Then came:

₹75,000 → 10% co-founder equity

Then came an incubator that was supposed to help us get traction and investors.

Then came meetings about removing co-founders.

Then came a meeting about removing me.

At some point, you stop asking:

"How do we make this relationship work?"

And start asking:

"Why are we still doing this?"

We chose the second question.

And we walked away.

We would rather bootstrap, take a carefully considered loan, or raise capital from people who genuinely believe in our mission than give away ownership to someone whose incentives do not align with ours.

To other founders: you are not alone in this.

The startup ecosystem has great investors, great advisors, and great incubators.

It also has relationships that are not worth having.

Learn to tell the difference early.

Sometimes the best fundraising decision you can make is to say:

No.

Have you had a similar experience? Or advice for navigating difficult investor relationships? Share it.