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If you end up with more investor demand than you can handle, you can always raise a larger amount of money. If a VC offers you a term sheet, expect their lawyers to ask you for more information like capitalizationtables, contracts, material agreements, employment agreements, and board meeting minutes.
Professional investors like to keep tight control of capitalizationtables and all stock owners, to facilitate their own payoff when a sale, merger, or public stock offering is held. Professional investors typically are accredited to at least the $200,000 level, and understand the risks.
1 vote by Elad Gil It's a risk/reward, supply/demand power equilibrium. If I grant equity to a outsourced developer for future services after his initial contract with me is delivered on, where on the capitalizationtable do I place him? I'm always su. more) Sign up for free to read the full text. This answer.
The reason these terms can produce returns by themselves is that they set the stage for a rejiggering of the capitalizationtable at some point in the future. One response from the LP community might be to demand commitments from new funds that prohibit inside-led rounds and cross-fund investing.
By the same token, Coats could find no correlation between the hot deals (where investor demand was highest) and the hot outcomes. Xconomy on Demand. At the time, he had been reviewing the outcomes of his previous venture investments, and found “some of my best deals were the ones that I had had trouble raising funds.” Dont despair….
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