Why are Preemptive Rights Important in Entrepreneurship?
In the context of entrepreneurship, preemptive rights are crucial for several reasons:
Protection Against Dilution: They protect early investors and founders from having their ownership percentage diluted when new shares are issued. Control Maintenance: They help maintain control over the company by existing shareholders, which can be particularly important in early-stage startups. Investor Confidence: Offering preemptive rights can attract more venture capital and angel investors, as it provides them with a safety net against future dilution.