Karma-Duped: A Cautionary Tale About the Murky World of Venture Lending
I&#x27;m not quite sure I understand. The owner signed a deal giving the lender the power to place people in the company, and prevent any recourse.<p>&gt; A bank can legally make you sign a release of any wrongdoing the bank may ever undertake in the future (!!) as a condition of their loan. Crazy?<p>Not to rub salt in, but I think the &quot;make you&quot; wording is telling here. No one made anyone take this loan. This is not crazy; it makes sense that one party might want to protect themselves from lawsuits. What&#x27;s &quot;crazy&quot; is accepting such a deal, giving them access to the company.<p>In essence, the owner put himself at complete odds with the lender. Indeed, it sounds like the lender had a huge incentive: loan X, if default, gain 2X. No one should have accepted it, but that doesn&#x27;t mean it should be illegal. I suppose it&#x27;s assumed that as a business owner, you&#x27;ll have a lawyer or be careful when signing things, unlike payday loans and such.<p>On a personal level though, it does suck and it is really terrible when you have to work with someone that&#x27;s trying to undermine you. It&#x27;s incredibly frustrating.