Q: We have an interested Angel for an investment in our startup LLC. We have a strong lawyer for support. We’d like to submit a draft Term Sheet to, as you say in your blog, “control the paper”. Everything I find online about Angel Term Sheets contemplates shares, which presumes a corporation (vs. an LLC). […]

Q: Can you explain what supra pro-rata is? It seems to be showing up in some VC term sheets now. What’s the impact on the entrepreneur? How hard should one try to negotiate it out? If a VC insists on this term, should the entrepreneur walk away? A:  (Jason)  First of all, for those of […]

Last week I attended a dinner put on by Ed Zimmerman and the fine folks at Lowenstein Sandler.  Ed has been an active participant in the NVCA model documents initiative and I’ve gotten to know him through the years as someone who is passionate about what he does, which among other things, is law and […]

Q: Have you experienced a company which grows along nicely, but does not offer a liquidity event? In the funding agreement, there is a clause for redemption rights. Is this used so that the VC can get out of the investment? A: (Jason). Yes, we’ve experienced companies growing nicely without liquidity events. And yes, we […]

Question: What’s your take on Convertible Warrants in a Series A round? What are the implications now and in future rounds for the entrepreneur as well as the VC? (Jason) I like my Series A rounds to be simple. The A round is always precedent for future rounds. If you haven’t read our term sheet […]

Question: While valuing a private company and arriving at a valuation do VCs take into consideration a discount for lack of marketability. If at all, how do they objectively arrive at a figure for such discounts? All of our deals have a lack of marketability in their securities. Startup companies, by definition, don’t have a […]