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Usually the protection against an investor suing a startup is that no startup in the future would take his money. But of course that only works if the investor wants to invest in more startups in the future. Does he?

Incidentally, this is one (of many) reasons it's better to take money from experienced angels. They have a brand to preserve.

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Hi - thanks for replying, much appreciated. No, he invests in anything that can make him money (property, clothing etc). He has maybe two or three tech investments.

You're absolutely right about taking money from experienced angels, I'd add always take money from somebody who understands the sector. Seems obvious, I know.

If he wants to invest in more startups, it may work to point out to him how tightly connected the founder community is. He may simply not realize the cost of maltreating you. But an investor suing a startup he invested in is so rare that a story about it could not fail to attract the attention of every other startup in his market.

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