Every founder has a version of the moment Cydni Rogers Tetro describes. The deal that was supposed to close. The investor who goes quiet. The term sheet that comes back so marked up it barely resembles what both parties agreed to. The phone call that confirms it's over.
Cydni is a founder, CEO, and technologist who has spent her career at the intersection of product and go-to-market strategy, from early enterprise software through a stint at Disney's Imagineering division to building and leading her own companies in digital transformation and SaaS. She also founded the Women Tech Council, a nonprofit that has put over 40,000 high school girls through its SheTech program in the 15-plus years since she started it.
Most people who've been through a deal collapse remember the shock. Cydni remembers the question she had to answer in the hours that followed. Had she actually done everything she could, or had she just told herself she had?
The company Cydni had stepped in to lead was running two tracks that had stopped going in the same direction. On one side, a services business generates real cash. On the other, a software platform funded in part by that services revenue, built on the assumption that the two would eventually converge.
They didn't. Services businesses and software platforms are different companies in almost every way that matters, from valuation to staffing to revenue recognition to what investors expect from each. Running both at $10 million in revenue, where every dollar placed on one track visibly comes from the other, forces the question sooner than most founders want to face it.
The executive team and investor group had split into two camps, one wanting to protect the services business, the other wanting to bet on the platform. The debate ran for months without resolution, because neither side had the authority to override the other, and neither had a shared definition of what success looked like. That kind of misalignment makes every decision slower and every deal harder, and it has a particular tendency to surface at the worst possible moment.
Cydni concluded the cleanest path was to find an external partner to acquire the software side, letting both tracks operate under a structure suited to each. She found one. They reached a signed term sheet, moved into due diligence, and began working through definitive docs.
The docs came back with roughly 70 percent of the language marked for change, and the other side called to say this doesn't look like you want a deal. Cydni held a meeting, but the two internal factions were still intact, each reading the red lines through its own lens. The revised docs went back and returned at 60 percent red lines. Then the partner asked to fly in and meet with her the following day.
She knew before he landed what that meant. The deal was finished, and so was most of the leadership on the product team. Cydni left the organization.
The lesson she pulled from it had nothing to do with the terms. A 70 percent red line on a signed term sheet is a signal, and when you can't get your own stakeholders to recognize it as one, you have a governance problem that no attorney can resolve. External counsel negotiates what the principals have already agreed on. When that internal agreement doesn't exist, the redlining is theater. The deal was already dead before the docs went out. That's a governance failure, and it's one that Intellectual Strategies sees in scaling companies regularly: the transaction surfaces the misalignment, but the misalignment was there long before anyone opened a term sheet.
That lesson stayed with her, and a few years later she needed it in a different situation entirely.
She was leading a new company with a signed agreement with a national retailer and six weeks until launch. They had been raising capital for months, which in practice meant waking up every day to a new rejection, not because the business was failing but because that's what fundraising is. After enough of those, Cydni stopped looking at her email until she got to the office. Starting the day with another rejection had become too heavy to carry before she sat down.
They got a term sheet, entered a no-shop clause, and spent 45 days in due diligence without talking to any other investors. Three days before close, a founder who had previously exited the company asked for something in the docs that made the deal untenable. Six weeks to launch, no capital, a retail agreement that wasn't going to wait, and 45 days of investor conversations that hadn't happened. That detail about the exited founder is worth sitting with from a governance standpoint. A former founder who no longer has an operating role but still holds enough structural authority to blow up a live transaction represents an unresolved cap table or shareholder agreement issue. How decision-making rights are defined for former equity holders, and what approval thresholds apply to major transactions, should be settled long before a deal reaches definitive docs.
A no-shop clause locks out other investor conversations for its entire duration. When a deal falls apart near the end of that window, the time is gone regardless of what happens next. The terms of the clause, including what triggers a breach and what recourse exists if the other side walks, belong in the negotiation, not the postmortem.
Cydni says she had to decide what grit meant to her. She stopped checking email in the mornings, committed to playing every card she had, accepted that the company might fail, and then went to work.
Accepting that failure was possible cleared the space to work. She stopped spending energy on denial and started spending it on calls. Six months of fundraising, two deal collapses, a no-shop that had locked her out of conversations for 45 days. At that point, enough looks like enough, and the founders who stop there aren't wrong to feel that way. They've read the evidence correctly. Cydni's move was to ask whether the evidence actually proved there were no more options, or just that the obvious options were closed.
She called a partner she had spoken to only twice. He wasn't on her fundraising list, and there was no particular reason to think he'd say yes. They did a deal in a week, and the company launched on schedule.
Both situations Cydni describe point to risks that compound in growing companies. The first is internal misalignment that reaches a transaction before it's been resolved. When the people around a deal table don't share a definition of what success looks like, the negotiation becomes a proxy war for a strategic disagreement that should have been settled months earlier. Two factions were using the docs to continue a fight the business hadn't finished, and no amount of legal redrafting was going to resolve a disagreement that was never really about the language.
The second is the cost of a no-shop clause when a deal falls apart late. Founders tend to think about no-shop provisions in terms of what they agree to do. The more consequential question is what they agree to give up. Forty-five days of investor conversations that don't happen is real cost, and if the deal collapses at the end of that window, the time doesn't come back.
Cydni held herself to a harder standard than most founders do in that moment. She kept going until she had genuinely run out of options, not just the comfortable ones. The distance between those two things is where a lot of companies die. The call to a near-stranger produced a deal in a week. The legal and governance work that FraxLaw supports, getting stakeholder alignment documented before a transaction opens, negotiating no-shop terms with full awareness of what's being given up, and resolving former founders' decision-making rights well before definitive docs, is about making sure the structure doesn't fail a founder at the moment she most needs it to hold.
For more on how misalignment between founders, leadership teams, and investors shows up in scaling companies, read PATTERN INSIGHT 2 — Misalignment as the Silent Growth Killer.
Listen to Cydni Rogers Tetro's episode here.
