capital is a high-risk investment that involves loaning money to new companies
in exchange for shares in the company and the right to have some input in the
business strategies. Generally,... more
What are the restrictions placed on founder's stock?.
Many sophisticated venture investors will ask that the shares held by founders and employees be subject to forfeiture upon departing the company,... more
What are Financing Expenses and who pays them?.
Typically with venture capital investments, the Company will pay the legal expenses of the attorney for the investors; generally the investors will... more
Recap: What are Anti-Dilution Provisions?.
Dilution prevention provisions are designed to protect the investor from dilution that may occur in subsequent financings where stock is sold at a price... more
What are Conversion Rights?.
Preferred stock will generally have a voluntary conversion right — permitting any holder of preferred stock to convert their preferred shares into common shares at any... more
What are Preemptive Rights?.
In addition to the provisions discussed previously to limit dilution, investors will often request preemptive rights or a right of first refusal as a tool to allow the... more
What is Board Representation?.
Venture capitalists will almost always have at least some representation on the company's board of directors, usually the lead investor or investors of the round will... more