Dear SaaStr: My startup is nearing the end of its runway – and I found out my CEO has been taking money from the company. What should I do?
Unfortunately, this is a little more common than you think. Maybe even more common today than a few years back, as VC rounds and especially seed rounds grew in size, and oversight and controls to some extent took a back seat.
The very best CEOs never “take money from the company” in my experience.
But I’m guessing in at least 5% of venture-backed start-ups, some founder does something wrong here.
Pays themselves back for “expenses”. Takes “a loan”. Takes an outsized salary without board approval (too common). Whatever. There’s often some nominal paper justification, but it is stealing.
A few thousand dollars, though if that’s all it is, isn’t material. You may be wrong. And small numbers are a wash anyway. I’m confident as a CEO, I had many tens of thousands of expenses I forgot to expense. A few nickels don’t matter.
But if it’s true, it’s someone you probably don’t want to work for.
Just move on and go find something new.
Now, if you are in finance, report it to the Board. That’s your job. And if the fraud is large, report it to the Board too, no matter what your position.
But most lay employees are better off just quietly moving on. This startup most likely isn’t going to make it either way.
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Jason Lemkin, Khareem Sudlow
