“I had the misfortune of raising cuckoo capital for my company” – complained an entrepreneur about his predicament. „Cuckoo capital?” – I asked back embarrassed about the feared gap in my investment education.  Vulture investors I have heard of and even dealt with, but “cuckoo” sounded something more benign.  Maybe it was behaving as a cuckoo clock, alerting the founder when it was time to pay dividends – I thought.

“He was going to come in as an angel investor” – he explained.  “He promised to help grow the business through strategic initiatives and business development.  A dynamic-looking Harvard educated guy, investing his father’s money, who had sold a manufacturing business in the US. He invested half a million dollars, joining me and other founding partners or our company.

“However, he turned out to have brought us no new clients” – he continued – “and his strategic contribution was a corporate coup.  He conspired with my minority partners to recall me as managing director and demote me to “technical director” with no budget for purchasing equipment or authority to sign sale contracts.”

“My “angel’s” next step was to increase share capital at par value, diluting my shareholding to below 10%. That deprived me of both voting influence and minimized my chances of future dividends.  My investor turned out to be a cuckoo capitalist, whom I nurtured as a partner, just to be jettisoned by him at the earliest opportunity” – he finished the tale.

This story is rare at private firms, but all too familiar at public companies. One example is Steve Job’s firing from Apple by John Sculley he had recruited from Pepsi to run the firm a year earlier with the famous one liner: “Do you want to sell sugar water for the rest of your life, or do you want to come with me and change the world?” But Jobs learned his lesson.  In 1997, he persuaded Apple CEO, Gil Amelio, to buy his company, Next Computer and take him on as presidential advisor, only to replace him 5 months later in a boardroom coup.