Venture Deals

scouting for new deals, helping with due diligence on existing deals

f the venture fund has had a good experience with an entrepreneur before and believes they can build a solid team postfunding

Second, it's not a good sign if you can't get others to get excited about your plan. It's hard enough to get VCs to write checks to fund your company; if you can't find other team members with the same passion and beliefs as you have, this is a warning sign to anyone who might want to fund your company.

First, no single person can do everything. We've not met anyone who can do absolutely everything from product vision to executing on a plan, engineering development, marketing, sales, operations, and so on. There are just too many mission-critical tasks in getting a successful company launched. You will be much happier if you have a partner to back you up.

Pick a few things that really matter—the valuation, stock option pool, liquidation preferences, board, and voting controls—and be done with it

There are only three things that matter when negotiating a financing: achieving a good and fair result, not killing your personal relationship getting there, and understanding the deal that you are striking.

While both of these are edge cases, in almost all of our experiences the no-shop agreement ended up being irrelevant. As each of these examples shows, the quality and the character of the people involved made all the difference and were much more important than the legal term.

Change the terms of stock owned by the VC.
Authorize the creation of more stock.
Issue stock senior or equal to the VC’s.
Buy back any common stock.
Sell the company.
Change the certificate of incorporation or bylaws.
Change the size of board of directors.
Pay or declare a dividend.
Borrow money.

If a subset of the board is being chosen by more than one constituency (e.g., two directors chosen by the investors, two by founders or common stockholders, and one by mutual consent), you should consider what is best: chosen by mutual consent of the board (one person, one vote) or voted upon on the basis of proportional share ownership on a common-as-converted basis.

a powerful incentive for the company to accomplish its investor-determined goals.