Startup Financing and VC Term Sheets
Section outline
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With the second main set of deal terms, the VC attempts to achieve two main goals:
- Anti-dilution provisions: These provisions protect the ownership stake of the VC against (excessive) dilution from future rounds of financing.
- Participation rights: With these rights, the investors make sure that they can (but do not have to) participate in attractive stock transactions or future rounds of financing.
Together with the preferred returns from the previous course sections, these rights and privileges help the investor limit the financial risk of investments in new venture and thereby make deals possible.
The purpose of this course section is to introduce and to learn how to apply the specific anti-dilution provisions and participation rights that are commonly used in term sheets.