Scottie Pippen shoes Tips On Venture Capital Deal Terms - Part Two
Then offer Angel investors a percentage based on the book value and the amount of funding you are seeking jordan 11 retro.If your company is a pure start up then focus on the percentage of the company you are willing to sell for X dollars, rather then a number of shares.
Your Management Team needs to be in agreement on what they are willing to give up if they get the full amount of funding they are looking for jordan 11 retro.Here are some questions the Team needs to agree on:Will they give up voting controlWill they agree to accept another Director to the BoardWill they agree to the funding being secured by all the assets of the Company Will they agree to an anti-dilution clauseWill they agree to a reverse merger and become a public company in six months2.
Anti-Dilution Clauses. If the Management Team feels that strongly about its business model or the company's revenue potential, offer investors an "Anti-Dilution" clause jordan 11 retro. I would not offer it to a typical Angel Investor unless it was able to close the deal and get you the funding.
In other words, use it as a carrot to close the deal jordan 11 retro.On the other hand, most Venture Capital investors that provide the first round of financing will probably demand an Anti-Dilution clause.
If you offer it first, it will show your confidence in carrying out your business plan and achieving success.Don't put it in the Term Sheet though, hold it until you are fairly certain they may fund. Then you can offer it, or at least not be so surprised, when they require it for investment protection.3. Super Preferred Stock. Use a Super Preferred Stock issuance to give your Management Team voting control. If a Venture Capital firm requires majority stock ownership, you may be able to maintain voting control. Make the Super Preferred non-convertible into common stock.It works something like this: Management would own 1,000,000 shares of preferred stock with voting rights of 20 votes per share for 20,000,000 votes. So if management owns 4,000,000 shares of common stock, but Angel investors own 6,000,000 shares, management still controls the company. The preferred stock holders would be entitled to vote on any matters on which the common stock holders are entitled to vote.
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