Venture Capital Term Sheet Negotiation — Part 9: Redemption Rights

This post is the ninth in a series giving practical advice to startups with respect to understanding and negotiating a venture capital term sheet.

In the prior eight posts, we provided an introduction to negotiation of the term sheet and discussed binding and non-binding provisions, discussed valuation, cap tables, and the price per share, discussed dividends on preferred stock, explained how liquidation preferences work, discussed the conversion rights and features of preferred stock, examined voting rights and investor protection provisions, analyzed anti-dilution provisions, and looked at anti-dilution carve-outs and “pay to play” provisions. This post will discuss redemption rights. [Read more...]

Venture Capital Term Sheet Negotiation — Part 8: Carve-Outs to Anti-Dilution Provisions and “Pay to Play” Provisions

This post is the eighth in a series giving practical advice to startups with respect to understanding and negotiating a venture capital term sheet.

In the prior seven posts, we provided an introduction to negotiation of the term sheet and discussed binding and non-binding provisions, discussed valuation, cap tables, and the price per share, discussed dividends on preferred stock, explained how liquidation preferences work, discussed the conversion rights and features of preferred stock, examined voting rights and investor protection provisions, and analyzed anti-dilution provisions. This post will discuss carve-outs to anti-dilution provisions that typically do not trigger dilution adjustments and also examine “pay to play” provisions. [Read more...]

Venture Capital Term Sheet Negotiation — Part 7: Anti-dilution Provisions

This post is the seventh in a series giving practical advice to startups with respect to understanding and negotiating a venture capital term sheet.

 In the prior six posts, we provided an introduction to negotiation of the term sheet and discussed binding and non-binding provisions, discussed valuation, cap tables, and the price per share, discussed dividends on preferred stock, explained how liquidation preferences work, discussed the conversion rights and features of preferred stock, and examined voting rights and investor protection provisions. This post will discuss anti-dilution provisions. [Read more...]

Venture Capital Term Sheet Negotiation — Part 6: Voting Rights and Protective Provisions

This post is the sixth in a series giving practical advice to startups with respect to understanding and negotiating a venture capital term sheet.

In the prior five posts, we provided an introduction to negotiation of the term sheet and discussed binding and non-binding provisions, discussed valuation, cap tables, and the price per share, discussed dividends on preferred stock, explained how liquidation preferences work, and discussed the conversion rights and features of preferred stock.  This post will explain how voting rights are typically addressed in a venture capital transaction as well as describe customary investor protection provisions. [Read more...]

Venture Capital Term Sheet Negotiation — Part 5: “As Converted” and Conversion Rights of Preferred Stock

This post is the fifth in a series giving practical advice to startups with respect to understanding and negotiating a venture capital term sheet. 

In the prior four posts, we provided an introduction to negotiation of the term sheet and discussed binding and non-binding provisions, discussed valuation, cap tables, and the price per share, discussed dividends on preferred stock, and explained how liquidation preferences work. This post will explain what “as converted” means and discuss conversion rights and features of preferred stock. [Read more...]