If things are going great, your previous investors will want to exercise their follow-on participation clauses (lets them put more money to maintain their percent stake at same terms as the new investors). Although lack of participation isn't necessarily a red flag (there are legit firm-specific business model reasons not to follow-on even if things are going good), it might still raise eyebrows ("if this is so great, how come your other investors aren't participating?").
Good investors open you up to their networks. If they're not taking your calls nor making intros to later-stage investors, that's a really bad sign (there still is an incentive to continue the game so portfolios look better even if things are just okay, so this one's hard to judge).
When things aren't looking good, they might pressure you to sell so they can cut their losses. Maybe they'll bring in a new CEO who's job it is to sell the company (that's why they demand board seats).
When things are really bad, they can pull out any remaining money. I haven't experienced this one and don't really understand the mechanics, but maybe someone else can chime in?
If things are going great, your previous investors will want to exercise their follow-on participation clauses (lets them put more money to maintain their percent stake at same terms as the new investors). Although lack of participation isn't necessarily a red flag (there are legit firm-specific business model reasons not to follow-on even if things are going good), it might still raise eyebrows ("if this is so great, how come your other investors aren't participating?").
Good investors open you up to their networks. If they're not taking your calls nor making intros to later-stage investors, that's a really bad sign (there still is an incentive to continue the game so portfolios look better even if things are just okay, so this one's hard to judge).
When things aren't looking good, they might pressure you to sell so they can cut their losses. Maybe they'll bring in a new CEO who's job it is to sell the company (that's why they demand board seats).
When things are really bad, they can pull out any remaining money. I haven't experienced this one and don't really understand the mechanics, but maybe someone else can chime in?