Investors in Silicon Valley who are concerned about overvalued tech companies now prefer startups to focus on profits over growth. But they often have a hard time getting these companies to open the books on the true state of their finances. “Only top investors typically receive periodic updates on revenue, profits and financial projections,” reports the Wall Street Journal. But a case in Delaware could make it easier for smaller investors, including many former employees who were paid in shares, to get a peek at the numbers.
For years, Jay Biederman, a former manager at Domo, a software company with a $2 billion valuation, has pestered the company for its financial statements to assess how much his shares are worth. He recently filed an affidavit, citing an obscure provision in Delaware corporate law, that could be successful at prying the information out of the company, legal experts tell the WSJ. The magic words he used in his affidavit–that he’s requesting the documents “for the purpose of valuing my shares.”MB