Anti-Dilution clauses are standard in term sheets when you raise capital for your startup. Many founders sign term sheets without knowing the implications of anti-dilution provisions. So, what is anti-dilution? This article will examine the three anti-dilution requirements and how each impact you as a founder. What is Dilution? To fully understand the meaning of […]
Introduction Drag-along rights are one of the common clauses in term sheets, that allow majority shareholders to force the remaining minority shareholders into a prompt sale. But this is based on the requirement that minority shareholders get similar terms and conditions like majority shareholders. After equity distribution between shareholders like the investors and founders, drag-along […]
Introduction Convertible notes are incredibly popular and practical for raising funds by startups. But startup founders often don’t understand the mechanics and fundamentals of convertible notes. The truth is that most investors don’t want to invest in startups that don’t guarantee a significant return on investment. Startups are inherently risky! From the perspective of startups, […]
In this article, we focus on a very important section in the term sheet – Liquidation Preference. Equity investment inevitably involves a significant element of risk. Since the risk involved in equity investment is significant, the likelihood of earning high returns on investment is also huge. That’s why investors want look to invest in equity […]
More often than not, founders prepare themselves to answer potential investors in the best way possible. However, that’s not the only way of convincing investors to give the funding that your company needs. This is because asking the right questions to your potential investors is also equally as important. Being able to ask good questions […]
A term sheet is a document that outlines the key terms of an agreement. It’s like an agreement but not legally binding. But that does not mean that there is no legal aspect associated with term sheets. There are many common misconceptions about the meaning of a term sheet, and how they work. So we’re […]
The VC term sheet is the first step where the rubber meets the road. You have essentially spent months of your time building the product, recruiting the team, and finding the right product-market fit. You probably have raised capital from friends and family, and gained the early traction that VCs usually look for. What is […]