When your startup fails, it's hard to let go and lots of founders try to save the last breath of their old company and roll it into a new one. Often, this is a mistake. Here's why:
1. Time & Money
Legal processes like recapitalizations and stock transfers are only worthwhile if there's a pretty strong business currently operating underneath the crisis, most of the time that's not the case and you should invest your efforts elsewhere.
2. Legal Hangover
If you bring over assets, customers, investors and IP from the failing business, legal issues could also follow you. Better to close up the old business and its liabilities, then start fresh without the potential for the past to be a distraction.
3. Better Terms for Investors
If you insist on trying to help out the failing company's investors, offer them first dibs on the new company with good terms. It's fair for them and simple for you.
Best of luck out there.
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