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# A Hedge Fund Bought Board Control of a Small Medical Device Company
- URL: https://www.pennystocks.news/femy-a-hedge-fund-bought-board-control-of-a-small-medical-de/
- Published: 2026-08-21T15:36:10.000Z
- Updated: 2026-08-21T15:36:10.000Z
- Description: Nantahala Capital paid roughly $12 million for a stake in Femasys and left with two board seats, veto power over major decisions, and an agreement that two current directors would go.
- Author: PennyStocksNews Team
- Tags: nasdaq, ticker-femy

A hedge fund put money into Femasys. It also walked away with **two board seats, the right to veto major corporate decisions, and an agreement that two existing directors would step down within 60 days.**

Femasys Inc. NASDAQ: FEMY 

Nantahala Capital, a Connecticut-based fund that focuses on small and micro-cap companies, paid **roughly $12 million** to participate in a **$30 million private placement** that closed on August 10, 2026, according to a Schedule 13D filed with the SEC on August 17\. Femasys described the broader deal in an August 7 press release published on GlobeNewswire.

The terms, set out in a side letter signed alongside the purchase agreement, go well beyond a typical investment. Nantahala can block the decisions that most shape a small company's direction — and it did not have to wait to fill its second board seat.

That seat was secured the moment the transaction closed. The side letter entitles Nantahala to one board designee as long as it holds at least 15% of Femasys's outstanding shares, and a second once it crosses 20%. The filing states that **the 20% threshold was met immediately after the purchase.**

The veto provisions reach into decisions that small-company management teams usually make without outside approval. Borrowing more than **$2.5 million,** replacing the chief executive, declaring dividends, expanding the board, and adopting a rights plan — the kind of defensive measure designed to dilute hostile buyers — all require Nantahala's written consent.

Alongside those provisions, Femasys agreed to use commercially reasonable efforts to facilitate the **voluntary resignation of two current board members within 60 days** of the closing. The filing does not name them.

Shares closed 23.18% higher at $2.71 on August 19, after the Schedule 13D became public, on dollar volume of about $111 million.

The side letter runs for **ten years from the date of the purchase.** Nantahala held no shares in Femasys before August. It now holds consent rights over who runs the company.